Questions about pre approval, car loan pay off and rate locks

[ruckussjr]

Hi all, I'm hoping to be able to purchase a home April 2023 when my current lease is up. 

interest rates are scary right now, and clearly we have no clue what's going to happen in the next 5 months but have a couple of questions. 

my score isn't amazing, middle score just under 630 now. Expect to be going through FHA for 3.5% down. Also depending on new year raises I may or may not qualify for DPA.  (I'm aware of chenoa fund and may use them if I get a large raise.) 

My score fell due to a huge income decrease based on a job change made at the worst time of my life and without all my best think ahead skills. I was very late on a time share, recently got it back to current. And am in a much better financial situation and am working very hard to be ready to apply. And paying down credit cards I used to survive the 6 months of credit destruction due to the drastic drop in income. 

Anyway, I'm not a perfect candidate by any means but I am pretty sure I'll get it done. However, I just found out that my x is planning to re-finance his house and pay of his vehicle that I am the main buyer on, and he is the co-buyer. 

I had originally planned to just have it excluded from my DTI as I haven't paid a penny on it in well over 12 months and was thinking he could just give me the statements to prove it. 

I have my own vehicle that I pay on time that isn't going to be paid off, but I know this installment loan pay off is going to ding my credit score. 

how much who knows, but he's going to be closing before I was planning to make the actual application since I am in my lease for another 5 months. 

So with that in mind, my questions anyone know how long the ding lasts? 

if it's long and will take another several months of rebuild to get me back to the required range anyone know how long an FHA rate lock is good for? And how long before they will have to pull my credit report again? 

lastly, anyone know how long an FHA pre-approval would possibly be good for? Is it just 60 days, 90 or is 120 reasonable. 

if it's not going to matter if I apply a bit earlier than planned because they will have to re pull before close then I'll just pray the ding doesn't set me back to badly, or wait longer and pay month to month on my lease for a bit but just curious if anyone might be able to give me some educated guesses on how these things. 

[cashorcharge]

In my experience, the hit from a paid auto loan last 6 months. I had no other penalties that would have dinged my score over that time and on month 7, it went back up.  In my case, I lost 8 points...and like you, I had another auto loan underway...though the elimination of one that was older, set me back a few.

As for "approval good for" I feel your best bet is to ask your lender specifically...reason being, while many may offer an FHA loan, I would think some of those rules may be tied to the bank itself...though I am not certain.  This is my gut feeling.

I also recall back when, in my case...my CB was not pulled again for my approval...however, unlike you...the process went open to close in 45 days...I didn't have an extended time sitting on the preapproval.  Good Luck!

And, Congrats on the EX paying off the auto loan in your name!  Yea, you may have a score dip, though the peace of mind on closing that account and tie to you is worth more in my opinion.  

[ruckussjr]

I'm going to call the mortgage guy I spoke with end of September tomorrow. Just like to get the opinions of others so I know what to expect. Hate relying on someone who's going to make money from the transaction without having some info to support what they tell me. 

I agree the x paying off the truck is ultimately a good thing! Just wasn't expecting it right before I was going to apply for a mortgage. But I won't be sorry to have it out of my name. 

[Bk2006]

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@ruckussjr wrote:

lastly, anyone know how long an FHA pre-approval would possibly be good for? Is it just 60 days, 90 or is 120 reasonable. 

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120 days, in my recent experience. Only got 1 hard inquiry at the time of application and then a soft inquiry a few days before closing. But my rate was not locked in until I went under contract for a house. This may all vary depending on the lender.

[ruckussjr]

Thanks that is good to know for comparison. 

I need to call the lender I spoke with about in September and run the news by them. But my time frames are not immediate so maybe I'll have time tomorrow at lunch.