Should I apply for mortgage pre-approval yet?

Submitted by Brilliant-Total-8767 t3_yhlqa4 in personalfinance

Hey all, I'm looking to buy a house but I'm not sure if I should apply for a mortgage yet. •I have my credit score where I want it. •I have my Debt-to-Income where I want it. •I have 0$ saved up as of today. Within 2-3 months I'll have my down payment/closing cost saved up.

Do I need to wait till I have the down payment/closing cost money saved up to apply for the mortgage? Do banks care how much money I have saved up at the time of application? How long are pre-approval letters good for?

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nkyguy1988 t1_iueey8l wrote

Only do pre-approval when you are serious about actually buying. They are only good for about 90 days anyway.

Yes, a pre-approval cares about money you have today. That's the literal point of a pre-approval. If you don't have funds today, you won't be approved, so starting it now is pointless.

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Brilliant-Total-8767 OP t1_iuegdxb wrote

I wasn't sure because when I applied for an auto loan pre-approval letter, my bank didn't ask for how much money I had on hand, I wasn't sure if it was different for mortgages. Thank you

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nkyguy1988 t1_iuegldg wrote

Car loans and mortgages are very different. One has basically the rules the bank wants to use and the other has strict government guidelines to follow.

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Brilliant-Total-8767 OP t1_iuek84t wrote

Time to save up and move out, hopefully I'll be in a new house by February

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k_lena t1_iuf3rmn wrote

I’m not trying to be a Debbie Downer but wanted to mention timeline to getting keys could very well be past February. I have gone through two house purchases and one took just over 4 months from going to the first viewing to keys and the other took just over 5. Generally it took about 2-3 months of looking at houses before we found one to offer on. Each had a slightly longer than normal offer to keys timeline (6 weeks instead of 4 because of delays in contingencies getting cleared). If you aren’t working with a realtor yet, that would be what I’d do next - find someone you like, trust and think will look out for you in the purchase process.

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Brilliant-Total-8767 OP t1_iuf5owo wrote

I've been told to not find a realtor until I already have the pre approval letter but I really want to start networking with one soon. I need to find out if the houses in my area are going for list price or going like 30k over list price. Once I can figure out how much over list price they're going for I can figure out how much to save before talking to a lender.

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k_lena t1_iuf6s0k wrote

I’m not sure why someone would recommend not having an agent before you have pre-approval. A realtor can also help you find a broker. I’ve definitely leaned on my agents for referrals in the buying process - brokers, contractors, roofers, even a chimney company!

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Brilliant-Total-8767 OP t1_iufau39 wrote

That's good news because I was a little stressed on having to get the pre approval before the realtor, it didn't make sense to do it in that order. Do you have any advice on what to look for in a realtor? I want to work with someone good

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k_lena t1_iufcps9 wrote

I found one of mine by showing up to an open house (without an agent) where she was the listing agent. We got to talking and I liked that she was blunt, she called out issues to be aware of, and she really knew the area well. She’s just a no BS type and that worked for me. The other I literally found on Redfin as a recommended local agent and interviewed him on the phone. Asked him about how he helps first time buyers, what he offers that other agents don’t. I liked his answers and I liked that he didn’t upsell when he set up tours. He respected the top of the budget and cared about the “must have” list.

All in all, the two of them knew the areas, knew the local players (other agents) and both worked hard for me and my interests. When buying, I’ve never signed a contract with an agent to be exclusive so I could find a new one if I wanted but that might not be a thing in your area.

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Brilliant-Total-8767 OP t1_iuff2rx wrote

Those are some good points. I'm gonna do some calling around and I don't plan on signing contracts to be exclusive. Thank you for your help

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Mashtatoes t1_iuefkfq wrote

A pre qualification will verify your assets for a down payment. You can add to your down payment later, but you need enough available to qualify for the mortgage.

If you have nothing saved up today, couod qualify for a mortgage only if you’re eligible for a 0% down mortgage.

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Brilliant-Total-8767 OP t1_iuegr1o wrote

I think USDA loans are the only loans that have 0% down, and that is an option for me based on the area we're looking in, but regardless, I'm going to need money for closing cost and leverage when submitting an offer letter.

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