Mortgage shopping recommendations - first timer, FSBO

[1t2b]

We are about to start the pre-approval process for a mortgage b/c a property kinda fell into our laps. We weren't expecting this so we haven't had much time to prepare and be sure everything is in order, but our MMS is decent (will prob be higher before we close) and our DTO both front and back is well into the safe range and our monthly income qualifies us for what we're looking for.

My question - does anyone have recommended lenders to contact to shop mortgage rates? Better? Rocket? Quicken? We're not in the area for USDA, but should we look into NFCU too? I see that mentioned a lot though I'm unsure why. We'll also add our credit union to the mix. Are mortgage brokers a good or bad idea? We've spoken to a couple when we initially looked into whether we could do an FHA loan (price is too high) and I want to be sure we're not misled.

One (I believe a mortgage broker) said something I didn't love - "Hopefully I'll earn your trust so you won't look elsewhere." He has to know that the smart thing to do is shop rates, so why would he say that? Is that a red flag? That same guy has sent over a FSBO questionnaire and an official contract form, which I presume I do not want to sign yet. He's saying you can't lock in rates until you have an accepted offer, is this true? It seems like that's maybe incorrect.

Is it smart to have lenders pull credit now before most recent accounts have updated so they can "help us get to where we need to be"? Or should I wait until the last minute?

Thanks so much. We'd be lost w/o this forum. I feel so ignorant, no matter how much reading/researching I try to do.

[MortgageMama]

I always say it's best to interview a few lenders. Have a conversation, pick their brain as to how best to structure your transaction to meet your needs. During the conversation, it should become quite clear whether you will like to work with him/her. If they are providing lots of information about the process, that's good. Never feel rushed. Whatever, you do, do not allow your credit report to be run until you have selected your lender. Those type of reports are hard hits to your score. Have a conversation about rates, each one should be able to provide a range of rates for different credit scores and down payment, but no one will be able to give you a sure quote without running credit and understanding your scenario. It's worth the time spent on the phone to find the right one. Please understand that we are in a volatile rate market right now, so if you get quotes make sure you get them all on the same day - even narrow it down to a.m. or p.m. That said, you won't get any warm and fuzzies from the online lenders, whose rates aren't always a bargain.

[pizzadude]

Good advice above, I'll add that you should pull your mortgage scores as well to see where you currently stand.   You can provide your scores to lenders to get some high level guidance in terms of what rates you'd potentially qualify for, before any of them pull your credit. 

[1t2b]

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@MortgageMama wrote:

Whatever, you do, do not allow your credit report to be run until you have selected your lender. Those type of reports are hard hits to your score. Have a conversation about rates, each one should be able to provide a range of rates for different credit scores and down payment, but no one will be able to give you a sure quote without running credit and understanding your scenario. It's worth the time spent on the phone to find the right one. Please understand that we are in a volatile rate market right now, so if you get quotes make sure you get them all on the same day - even narrow it down to a.m. or p.m. That said, you won't get any warm and fuzzies from the online lenders, whose rates aren't always a bargain.

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Wow there's some excellent information in here, thank you! I knew the market is currently volatile, but hadn't thought about needing to do them all in the same day or morning. I will def implement that advice, thank you again. About the hard pull- I thought if it's done w/in the same 2 wk period that it only counts as one pull, is that incorrect?

[1t2b]

Question about that - what if our MMS is decent like over 700, but we still have higher utilization of credit cards. Which carries the most weight? I know paying down the cards will spike the score, but since this fell into our laps and we don't have time to prepare, I'm balancing having capital for "just in case" stuff w/ MMS w/ down payment amount. We're leaning towards keeping as much liquid available as possible just b/c we've never done this before. I presume our MMS is still high even w/ the higher utilization b/c we have an extensive history, good payment record, good mix of credit, no recent inquiries. 

[pizzadude]

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@1t2b wrote:

Question about that - what if our MMS is decent like over 700, but we still have higher utilization of credit cards. Which carries the most weight? I know paying down the cards will spike the score, but since this fell into our laps and we don't have time to prepare, I'm balancing having capital for "just in case" stuff w/ MMS w/ down payment amount. We're leaning towards keeping as much liquid available as possible just b/c we've never done this before. I presume our MMS is still high even w/ the higher utilization b/c we have an extensive history, good payment record, good mix of credit, no recent inquiries. 

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This is why you should pull your scores to see where you stand now, then talk with lenders to understand if you're in the range to qualify, then ( if necessary ) you can make adjustments such as paying down revolving utilization which is the quickest way to boost your score.  

In terms of inquiries, pulling your scores yourself won't impact your score.   If lenders' inquiries are all properly coded as mortgage related then they'd be grouped together and scored as a single inquiry.  The time window for this varies between FICO score models, generally it's between 14 - 30 days.

[1t2b]

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@pizzadude wrote:

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@1t2b wrote:

Question about that - what if our MMS is decent like over 700, but we still have higher utilization of credit cards. Which carries the most weight? I know paying down the cards will spike the score, but since this fell into our laps and we don't have time to prepare, I'm balancing having capital for "just in case" stuff w/ MMS w/ down payment amount. We're leaning towards keeping as much liquid available as possible just b/c we've never done this before. I presume our MMS is still high even w/ the higher utilization b/c we have an extensive history, good payment record, good mix of credit, no recent inquiries. 

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This is why you should pull your scores to see where you stand now, then talk with lenders to understand if you're in the range to qualify, then ( if necessary ) you can make adjustments such as paying down revolving utilization which is the quickest way to boost your score.  

In terms of inquiries, pulling your scores yourself won't impact your score.   If lenders' inquiries are all properly coded as mortgage related then they'd be grouped together and scored as a single inquiry.  The time window for this varies between FICO score models, generally it's between 14 - 30 days.

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Thank you. I actually have the fico membership so I can pull my report and see my mortgage scores. I'm just wondering if I have a decent MMS score (I currently do) but my utilization rate is higher, does the utilization matter as much? Or does the MMS carry more weight?

[pizzadude]

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@1t2b wrote:

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Thank you. I actually have the fico membership so I can pull my report and see my mortgage scores. I'm just wondering if I have a decent MMS score (I currently do) but my utilization rate is higher, does the utilization matter as much? Or does the MMS carry more weight?

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Your revolving utilization is a major factor in your FICO scores so yes, it matters but if your scores are good enough for approval then you may not need to do anything right now.  Underwriting will care about your DTI and if they're concered about it then they'll mention it to you.

[1t2b]

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@pizzadude wrote:

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@1t2b wrote:

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Thank you. I actually have the fico membership so I can pull my report and see my mortgage scores. I'm just wondering if I have a decent MMS score (I currently do) but my utilization rate is higher, does the utilization matter as much? Or does the MMS carry more weight?

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Your revolving utilization is a major factor in your FICO scores so yes, it matters but if your scores are good enough for approval then you may not need to do anything right now.  Underwriting will care about your DTI and if they're concered about it then they'll mention it to you.

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I think I'm understanding you but to clarify, what you're saying is that utilization has a lot to do w/ how high your MMS will be, but if you have a high enough MMS already, then the lender puts more weight on that than on utilization. Is this correct? I'm presuming that there are other factors in my credit that give me a higher MMS despite the current utilization.

[pizzadude]

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@1t2b wrote:

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I think I'm understanding you but to clarify, what you're saying is that utilization has a lot to do w/ how high your MMS will be, but if you have a high enough MMS already, then the lender puts more weight on that than on utilization. Is this correct? I'm presuming that there are other factors in my credit that give me a higher MMS despite the current utilization.

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That's correct -- You could improve your FICO scores / MMS by optimizing your revolving utilization but it may not be necessary.

Your lender won't necessarily care about your utilization % but it will be part of the picture when they're looking at your DTI, as they want to ensure you can afford your new mortage payment while still being able to pay your other monthly obligations.