Preapproval

[Anonymous]

Good morning. I have been a long time lurker and the information that you guys give is truly invaluable. I have learned so much from your topics and responses and this forum gave me the confidence to step out to try to get a preapproval.

My spouse and I are looking to relocate to a warmer climate about 609 miles away. He is already retired and I will retire in 3 years. We’ve decided to purchase our retirement home now as prices and rates are good. We are not selling our current home yet so this is a second home purchase.

My mid score is 659 his is 679. We have combined monthly Income of $14k. Our current DTI is right at 20%. The scores are low bc of high utilization >60% and a late mortgage payment in January 2018. I tried to goodwill that as I truly forgot about it but no go. I’ll try again but I digress.

We plan to pay down the utilization and get to AZEO within the next few months. We were given the “what if” calculation by our lender. We were preapproved with a rate of 5%-my low score-but told if both scores increase to at least 680 we will close at 4.3%. This is a new construction so we have about 6-9 months to work on that. We’re putting 10% down on no more than $400k home.

My question is - with a mid score of 680 or above, what is the prevailing rate? We will see what the builders preferred lender offers when we go down in a couple of weeks but didn’t want another hard pull right now when we already have a preapproval which is what the builder requires to even make an offer. Should we shop other lenders prior to closing? If so, how far out from closing should we look at other lenders?

[Mortgage-Specialist]

The builders "preferred lenders" typically have higher interest rates. Sometimes they mention they will cover your closing costs if you utilize their preferred lenders but many times that means their preferred lenders increase the rate to essentially "cover the costs."

You have quite a bit of time to shop. Lenders interest can be cyclicial. Lenders sometimes reduce their rates below the norm for a few months to draw in more business, then raise above norm. You just have to keep your finger on the pulse and see who's offers are best closer to the time your home is completed. 

[Anonymous]

Thanks so much for the insight. We will stay up to date on rates and when we get near closing, look to see who has better offer. I’ll also check with the realtor to see who she works with in that area since we are transplants.

Thanks again!