home buying snacks

get prequalified, and then some!

So! Now that you’ve decided that you want to start looking at houses, you are going to want to get preapproved for a mortgage. 

Wait, you said “prequalified” in the title? What is that?

Don’t worry, we’ll get to it. 

As I’ve said before, prequalification and preapproval should t be your first or second step in the home buying process. 

First, you need to know where your credit is at (so you know if you need to work on it before you call to get preapproved) and then you should know your DTI ratio and use it in the formula I’ve showed you to see what you can feasibly afford (both things can be done by you, without causing any damage to your credit score. Check out past posts to find out how). 

If you’ve done these things and you have found that buying a house is doable for you, now you can start the preapproval process. This process will let you know what amount you can borrow from the bank, giving you a price range to start looking at houses for real. 

But first! The difference between prequalified and preapproved! (Because you’ll either hear both terms thrown out there by lenders or you won’t and you really need to know the difference. It frickin matters, people!)

Prequalified: when you speak to a mortgage lender and he/she asks you your general credit score, income, debts, assets. They basically just punch in these numbers to a computer and the computer tells you what you can afford. It’s pretty much the DTI ratio and formula that you can do yourself. They’re not telling you anything you didn’t already know and it’s certainly no guarantee that you’ll even get a mortgage. It means next-to-nothing. 

If you want to start looking at houses and making offers to sellers, you need a preapproval letter. 

Preapproval: more thorough process that includes pulling your credit, asks your income, debt, and should go through your bank statements, pay stubs, and tax statements. Make sure whoever is preapproving you does all of this (it will give you the most accurate amount you can borrow). After this is done, you will receive an email copy of a preapproval letter. 

A preapproval letter is used when you make an offer to a seller. It shows that you can afford the house you are putting an offer on. Very important: the letter is good for 30 days. This is why you make sure you are actually ready to buy a house before you call for a preapproval. 

Once the 30 days are up, you will need a new preapproval letter and your credit may be pulled again, resulting in your score decreasing. 

But what if you want to shop around for a mortgage, aka get preapproved by a bunch of lenders?

Well, you certainly should, darnit. 

If you do your mortgage shopping within 14 days from start to finish, your credit score gets docked only once. In the world of credit, they want you to be a savvy shopper and therefore won’t punish you for shopping for the best rate. Just keep in mind the time limit. 

Different lenders will have different interest rates, pros, and cons. Write all of these down each time you talk to someone and compare them. For example, one lender told me that I would be approved for X amount as long as I paid off my $12,000 car loan. Thanks, but no thanks. Onto the next one. 

Now, how to go about finding mortgage lenders. 

I started with the bank where I have my checking and savings accounts. Many banks have special interest rates for their members, so this is a good place to start. 

There are also specific mortgage lending companies that you can talk to and they’ll have a lot more options than your bank will, if you have a tougher case like I did. 

I stayed away from online loan companies. I don’t generally trust the idea of it, but that’s me. Also, it was important to me that I can talk to an actual person handling my account and not a general operator. But so what works for you. 

Ultimately, I went with a friend’s uncle. (Jeff Lundgren of RMS Mortgage out of the South Eatern, MA office. Cannot say enough good things about him. Really). 

I was chatting about how hard of a time I was having getting approved for a mortgage and she said “oh my uncle does that. I’ll give you his number.” (He works for RMS Mortgage and I honestly can’t say enough good things about them. Just stellar. No crazy terms, always answered the phone, always answerd emails quickly, didn’t laugh at me, etc.)

So, shop around as much as you can and make sure you get a preapproval letter after they’ve been through your pay stubs, taxes, and debts. 


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