When should I apply for a mortgage preapproval?

[Anonymous]

Haven't dropped in in a while, but thought I'd ask since the forums have been so helpful to me in the past. My wife and I are renters, in the highly competitive and insanely overpriced DC area. I am a first time homebuyer, she is not.

We are looking in the Baltimore area because it is so much cheaper and less competitive, even though my commute will be hell. Our current lease runs out at the end of March 2018, and we would like to move into our first "real" home together at that point.

How long does it typically take to get preapproval etc all together so we can start shopping? And what is the average escrow period? Trying to position ourselves so that we won't a) be homeless waiting to close or b) have to pay both our new mortgage and rent until the end of our lease.

If it matters, my scores are all about 700, with the mortgage scores looking a bt higher, maybe 720. My solo income is 110k. We would probably go FHA or NFCU's homebuyers choice, because we don't have much for a downpayment-- years of money mismanagement but all is righted now.  My wife is self-employed so we may apply initially with just me, because income verification is gonna be sketchy for her. I did a soft pull preapproval with Capital One a few months back and got a 285k ballpark number. Houses we are looking at are between 200-300k.

[JVille]

Before you start looking with a Real Estate Agent you need to sit down with a Lender and all your tax Records, W2’s and paystubs and have a discussion about your qualifications and issues with your personal situation.

Best to use a Lender & Loan Officer that is recommended by friends, relatives and your RE Agent. You want to use someone who is an expert and not be someone’s first deal. Using a well known Lender/Loan Agent will also get your Offers a better reception when comparing your offer to some other offer with an unknown lender. Your Realtor will have her favorite 2 or 3 that’s a good place to start. She/he won’t send you to someone you will make a mess of your deal.

When should you do this, now, the sooner the better. How long will it take? With a great lender it can take as little as a day or two. With an incompetent lender it can take forever.

Hope this helped! Talk to someone soon and take your complete records with you to not waste time. Good luck!

[NC_Mtg_Loaner]

You should probably talk to one yesterday.....

What concerns me about your post was the statement where you are claiming you don't have much money saved up for down payment.   Consdiering your income is roughly $10k per month you might easily be able to come up with your minimum required down payment of 3.5% (FHA) or 5% (Conventional) for your loan, but do you have any money saved to pay closing costs?  

Depending upon current market condtions, this could very well limit your ability to move forward and you definitely want to reach out to a trusted and knowledgable industry pro who can help you gauge where you are, where you need to be and how you can get there from here.  

Not sure if you have the ability to borrow from a retirement account or not, but if you do that's a good option for saving for a down payment because those funds can be collected pre-tax (traditional 401k) and can accumulate and grow quickly if you get started now--not to mention the tax advantages. (consult your tax professional)

[blossom_rebuilding]

The housing market is indeed much more affordable in Baltimore, so I absolutely understand your choice, but as a survivor of that hellish Baltimore-DC commute, I wish you good luck and lots of patience. In answer to your question, right now it might be a tad early to apply if you're not looking to take possession of a place until March 2018, but generally it's better to get pre-approval sooner rather than later. You can renew it by submitting updated documents if you need to, so if you get pre-approval ASAP, you might also be looking at re-submitted documents to renew. It took about two weeks to get pre-approved once I submitted my documents and application (because I started at the end of the month, which is a busy time for underwriters; my loan officer told me that if I had applied at the beginning of the month, I could have gotten through the process faster). My preapproval was good for 60 days, and I was in escrow 30 days, so beginning to end the entire process was 90 days (I applied for pre-approval at the end of May, was pre-approved in early June, was under contract in early July, and closed in early August, well within my pre-approval terms, which worked out great because my lease was up in mid-September, so had limited overlap). Ultimately depends on your lenders terms and the contract terms once you have an accepted offer, and on how long you think your house hunt will take. Good luck again!

[Anonymous]

Thanks to all who’ve replied.

I can cover closing costs or a 3.5% down payment, not both at the moment. Hence why I was looking at the NFCU homebuyers choice, because they do no down payment and no PMI. I would then aggressively pay down much more than required as the money comes in. Or, if the numbers don’t shake out right, I may have to wait a bit longer to save more if the FHA ends up a better deal even considering the PMI... it’s hard to know without applying and getting rates, I guess.

I feel like inventory is high where we are looking, so I may try to keep saving and get rid of tiny CC debt till the end of the year, then apply in January.

I am not looking forward to the commute but my saving grace is I work very odd hours, so I am often able to travel at off peak times. Here’s hoping!

[JVille]

You do not to apply for anything. What has been strongly suggested is to simply sit down with a “Smart” lender and have a Loan Counciling session to go over your situation and make sure you can meet your home buying goals next Spring.

It would be unfortunate if you found the home and had not planned ahead to meet the needs of qualifying for your loan.
I encourage to find a great lender now and make an appt ASAP.

[JVille]

Sorry drives me crazy I can’t edit and auto correct is my enemy

[Anonymous]

Yes i see what you’re saying. I have a recommendation for a loan officer with Navy that a colleague said is excellent so I will speak to him. I’ll update in the event it helps others.