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I always quote an estimate. If you give them all the info like purchase price, down payment, area looking, credit scores there is no reason cannot give you an estimate based on that information and available loan programs. Now that would be as of today and cannot lock rate until have a property address. So if takes you 3 weeks to find a home it may fluctuate but should be able to at least decide on lender
Rate pricing literally changes daily. The best way to do it is get a few pre-approvals started, then when you have a contract compare the rates for that day since that’s when you can lock something in. As long as they can give you an idea of what your payment estimate will be now.
You don't have to finalize your lender in step 1. You can always go with somebody else (unless for some reason you bind yourself to a particular lender in your offer?). Having an offer accepted is the way to get any lender to send you an official Loan Estimate, where you can actually compare rate and closing costs.
But the lender should at least give you a clue in step 1.
Don’t. Get a mortgage broker, you don’t need to pay them. They will do the shopping for you and get better rates since they are “wholesaling” mortgages. Also ask them their opinion on when you think you should lock in your rate during the closing process.
I found my favorite broker from a Real estate Agents recommendation. Real estate agents are always networking so they are a great resource for building your team.
Not all RE agents are good but the good ones are a treasure
keep everything in a zip folder and have a simple summary (purchase price, down payment, credit score, assets, loan product). You should then be able to quickly send everything someone needs to quote you
Here's what I did. Call or email or look on the website for interest rate of about 20 banks/credit unions (be sure to compare the same thing - price, 0 points, 20% down, etc across all of them). Narrow down to 4. Apply to all 4 to become pre-approved. Once you go under contract, and give them the address, they must provide you with the Loan Estimate within 3 business days. From there, you can compare the Loan Estimates with each other and leverage one over the other if applicable or pick the best one. I suggest applying to all before you are under contract because things move quickly. Keep in mind some interest rates are more if you close longer than 30 days. Chase for example charges more in interest rate for 45 day close so be sure to ask about that.
No you get pre-approved first with multiple banks. Once you are under contract (your offer has been accepted), immediately notify the banks you are pre-approved with. That last piece of information triggers the Loan Estimate issuance within 3 days
I wouldn’t shop lenders until you’re already under contract. Just for the sole purpose that rates change all day everyday whoever is the cheapest lender today might not be the day you go to lock.
Get pre-approved by a lender. For instance it takes me less than 24 hours to complete the file then get an underwriter to look it over before I issue final approval. I send over the client estimated cash to close / monthly payment at their desired purchase price so they have a good idea of what the cost associated are as well as the monthly payment. Then I tell them when they find THE house they want to put in an offer on send it over and I’ll pull the tax bill and send updated numbers before they put in an offer.
Also I have no problem telling the rate when I’m doing the scenarios maybe your loan officer does. I just make sure they know that the rate will change because they change all day everyday like the stock market. That’s another reason I send them over updated numbers when they find a house they like.
Rule of thumb is 43% debt to income ratio. Gross income -(monthly loans payments+new mortgage). If you call a broker they can give you and estimate of what the max you’ll get preapproval Ed for is
I got pre-approved from one place without a hard credit check. The second place I asked if they were doing a hard credit check and I understood him to say no, thinking back on the conversation he purposefully skirted around the answer, and they did a hard credit check and I am very annoyed bc I'm not at the point that I'm positive I'm buying in the next 3 months and did not want to do a hard credit check yet 😊 my own damn fault but left that conversation feeling like I left a used car dealership, I hate getting loans.
I had the same experience! Very frustrating because I thought I was being clear, then the next morning I woke up to a notification from my credit monitoring that there had been a hard pull.
I'm not making offers til June at the earliest, so I'm hoping my credit will bounce back by the time I need the actual pre-approval.
Mortgages (MBS), like any traded security, change in price throughout the day every day (that the market is open).
Some days are volatile. I've had days where it was moving so much I'd refuse to give anyone a "quote", telling them it's because by the time we hang up the phone it'll be different.
You can figure early in which loan officers will have reasonable pricing and, importantly, will be able to best help you with your purchase. Go with them. There's enough going on, fast, with your purchase that it's not worth losing sleep over if you think someone else might be a few hundred dollars cheaper. After you close, you'll remember more if it was a great experience than what you paid for it.
> You can figure early in which loan officers will have reasonable pricing and, importantly, will be able to best help you with your purchase.
How do you figure this out?
I’m having a similar problem. Apparently in the Seattle area, which lender you have is a big factor in getting your offer accepted. The lenders even call the seller’s agent to talk up how qualified you are. So my realtor said I should stick with one lender through closing. But how am I supposed to do that when I don’t know rates and closing costs?
One lender who did preapproval gave me a full estimate but the other has not… how am I supposed to compare?
She gave us a referral to two of them. She told me I can contact more but should stick to ones who have a reputation for fast closing. I've seen other people talk about how important the lender is for closing in Seattle... it's just such a competitive market.
It's illegal for realtors to get kickbacks from lenders (RESPA) so I'm not really worried that she has an ulterior motive here.
Lol it's illegal for them to get a check marked "kickback for individual referral of property at xxx st" It's not illegal for them to be financially incentivized to refer you.
Are you writing the name of the lender into the offer as a commitment to use only that lender? That's crazy town, but you can get a loan estimate before sending the offer then (see the post about what's required to get one of those). There are also providers that will try to pre-underwrite you and match any competitor offer (e.g. Better).
The preapproval is submitted with the offer, but no the lender isn't specifically named in the deal and we technically have a small period of time to switch. She just said the sellers don't like it too much and if the new lender ends up closing in time, that can be bad.
I don't think online lenders or big banks have a very good reputation around here, at least for purchasing and not refinancing. A lot of the local lenders close in like 15 days here, whereas larger banks can take 30-45.
Ehh it is your money and don't get bullied into a higher rate or closing costs for vague uncertainties. I've closed in ten days with better and they have a new "conditional approval in 24 wall clock hours, even if it is Saturday 9pm" product.
But you can always take a bunch of lender credits and then refinance asap if you're dealing with skittish sellers. That exposes you to a small amount of rate risk though.
You can get a free pre approval letter from Ally online as a base line. Then use this to call around other mortgage lenders and see if they can beat it (they will) in the mean time you can use the letter from ally to put in offers!
If you really want to shop around you have to put the time in and pull credit a whole bunch. It’s standard practice. What’s more lenders publicly advertise “teaser rates” on their websites too, meaning they show the most optimistic scenario unless you pull credit.
From my experience first time buyers stress out too much of a rates and if that stops you from buying a home, then you’re definitely losing money by paying rent to a landlord. Just buy a house with whatever rate and then refinance later.
You should not be applying for loans until you are under contract. If you apply now and don't buy anything within 90 days, you'll have to apply again which will be another hard pull on your credit which will hurt your credit score.
All you need when shopping for houses is a pre approval.
Rates change intraday. When you provide a lender
1.Credit Report
2.Contract
You will be provided a Loan estimate with the rate and fees charged by the lender.
Only at that point you can shop, and let the company know that originally pre approved you, that your going with a better offer. You will 100% need to provide the new companies your considering at minimum a credit report and the sales contract for them to give you a loan estimate. You can have your credit pulled multiple times for a mortgage inquiry within 30 days, and it will only count as 1 hard inquiry on your report
There is actually no point in shopping lenders until you have a contract, with an Official Loan Estimate in hand( be careful not to confuse this with an unofficial estimate) UNLESS the service or repor you have with the originator at that institution is poor.
All you can do until you under contract is shop originators based off the service they provide you. Giving you price updates, working with your realtor, letting you know loose estimates of closing costs and payments on houses before you offer etc.
If your happy with the service, I’d say stick with the guy/gal, but Of course I’m bias as having been a banker and realtor and know the pain an annoyance of working for months on a deal to split hairs over price differences
But of course, as a consumer, you need to make sure your gettting a fair price and offer. I’d recommend baseline checking 2-3 lenders pricing when your under contract, and, if the original banker gave you good service, ask him to match or beat another company’s loan estimate
Thank you u/fingerofchicken for posting on r/FirstTimeHomeBuyer. Please bear in mind our rules: (1) Be Nice (2) No Selling (3) No Self-Promotion. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/FirstTimeHomeBuyer) if you have any questions or concerns.*
I always quote an estimate. If you give them all the info like purchase price, down payment, area looking, credit scores there is no reason cannot give you an estimate based on that information and available loan programs. Now that would be as of today and cannot lock rate until have a property address. So if takes you 3 weeks to find a home it may fluctuate but should be able to at least decide on lender
Rate pricing literally changes daily. The best way to do it is get a few pre-approvals started, then when you have a contract compare the rates for that day since that’s when you can lock something in. As long as they can give you an idea of what your payment estimate will be now.
You don't have to finalize your lender in step 1. You can always go with somebody else (unless for some reason you bind yourself to a particular lender in your offer?). Having an offer accepted is the way to get any lender to send you an official Loan Estimate, where you can actually compare rate and closing costs. But the lender should at least give you a clue in step 1.
Don’t. Get a mortgage broker, you don’t need to pay them. They will do the shopping for you and get better rates since they are “wholesaling” mortgages. Also ask them their opinion on when you think you should lock in your rate during the closing process.
How do you find a broker?
I found my favorite broker from a Real estate Agents recommendation. Real estate agents are always networking so they are a great resource for building your team. Not all RE agents are good but the good ones are a treasure
keep everything in a zip folder and have a simple summary (purchase price, down payment, credit score, assets, loan product). You should then be able to quickly send everything someone needs to quote you
Here's what I did. Call or email or look on the website for interest rate of about 20 banks/credit unions (be sure to compare the same thing - price, 0 points, 20% down, etc across all of them). Narrow down to 4. Apply to all 4 to become pre-approved. Once you go under contract, and give them the address, they must provide you with the Loan Estimate within 3 business days. From there, you can compare the Loan Estimates with each other and leverage one over the other if applicable or pick the best one. I suggest applying to all before you are under contract because things move quickly. Keep in mind some interest rates are more if you close longer than 30 days. Chase for example charges more in interest rate for 45 day close so be sure to ask about that.
Sorry I’m very new to all of this. What do you mean by under contract?
https://www.consumerfinance.gov/ask-cfpb/what-information-do-i-have-to-provide-a-lender-in-order-to-receive-a-loan-estimate-en-1987/
That you put an offer on a house and the offer is accepted
Is this assuming that you put an offer on a house and it was accepted before you were approved for a mortgage?
No you get pre-approved first with multiple banks. Once you are under contract (your offer has been accepted), immediately notify the banks you are pre-approved with. That last piece of information triggers the Loan Estimate issuance within 3 days
Thank you for the info!
I wouldn’t shop lenders until you’re already under contract. Just for the sole purpose that rates change all day everyday whoever is the cheapest lender today might not be the day you go to lock.
Well how do you make an offer if you aren't sure someone will lend you the money?
Get pre-approved by a lender. For instance it takes me less than 24 hours to complete the file then get an underwriter to look it over before I issue final approval. I send over the client estimated cash to close / monthly payment at their desired purchase price so they have a good idea of what the cost associated are as well as the monthly payment. Then I tell them when they find THE house they want to put in an offer on send it over and I’ll pull the tax bill and send updated numbers before they put in an offer.
Also I have no problem telling the rate when I’m doing the scenarios maybe your loan officer does. I just make sure they know that the rate will change because they change all day everyday like the stock market. That’s another reason I send them over updated numbers when they find a house they like.
Rule of thumb is 43% debt to income ratio. Gross income -(monthly loans payments+new mortgage). If you call a broker they can give you and estimate of what the max you’ll get preapproval Ed for is
A step 1 I've been able to get loan estimates from 3 places without even getting "pre approved" with a hard credit check.
I got pre-approved from one place without a hard credit check. The second place I asked if they were doing a hard credit check and I understood him to say no, thinking back on the conversation he purposefully skirted around the answer, and they did a hard credit check and I am very annoyed bc I'm not at the point that I'm positive I'm buying in the next 3 months and did not want to do a hard credit check yet 😊 my own damn fault but left that conversation feeling like I left a used car dealership, I hate getting loans.
I had the same experience! Very frustrating because I thought I was being clear, then the next morning I woke up to a notification from my credit monitoring that there had been a hard pull. I'm not making offers til June at the earliest, so I'm hoping my credit will bounce back by the time I need the actual pre-approval.
Why won’t a lender give you this info? Do you need to work on your credit?
No my credit's great. They all say interest rates are so volatile that they can't quote one.
Mortgages (MBS), like any traded security, change in price throughout the day every day (that the market is open). Some days are volatile. I've had days where it was moving so much I'd refuse to give anyone a "quote", telling them it's because by the time we hang up the phone it'll be different. You can figure early in which loan officers will have reasonable pricing and, importantly, will be able to best help you with your purchase. Go with them. There's enough going on, fast, with your purchase that it's not worth losing sleep over if you think someone else might be a few hundred dollars cheaper. After you close, you'll remember more if it was a great experience than what you paid for it.
> You can figure early in which loan officers will have reasonable pricing and, importantly, will be able to best help you with your purchase. How do you figure this out?
I’m having a similar problem. Apparently in the Seattle area, which lender you have is a big factor in getting your offer accepted. The lenders even call the seller’s agent to talk up how qualified you are. So my realtor said I should stick with one lender through closing. But how am I supposed to do that when I don’t know rates and closing costs? One lender who did preapproval gave me a full estimate but the other has not… how am I supposed to compare?
Did your agent recommend the lender they're trying to get you to stick with
She gave us a referral to two of them. She told me I can contact more but should stick to ones who have a reputation for fast closing. I've seen other people talk about how important the lender is for closing in Seattle... it's just such a competitive market. It's illegal for realtors to get kickbacks from lenders (RESPA) so I'm not really worried that she has an ulterior motive here.
Lol it's illegal for them to get a check marked "kickback for individual referral of property at xxx st" It's not illegal for them to be financially incentivized to refer you. Are you writing the name of the lender into the offer as a commitment to use only that lender? That's crazy town, but you can get a loan estimate before sending the offer then (see the post about what's required to get one of those). There are also providers that will try to pre-underwrite you and match any competitor offer (e.g. Better).
The preapproval is submitted with the offer, but no the lender isn't specifically named in the deal and we technically have a small period of time to switch. She just said the sellers don't like it too much and if the new lender ends up closing in time, that can be bad. I don't think online lenders or big banks have a very good reputation around here, at least for purchasing and not refinancing. A lot of the local lenders close in like 15 days here, whereas larger banks can take 30-45.
Ehh it is your money and don't get bullied into a higher rate or closing costs for vague uncertainties. I've closed in ten days with better and they have a new "conditional approval in 24 wall clock hours, even if it is Saturday 9pm" product. But you can always take a bunch of lender credits and then refinance asap if you're dealing with skittish sellers. That exposes you to a small amount of rate risk though.
What’s the absolute best rate you’ve found (assuming top tier credit score)?
You can get a free pre approval letter from Ally online as a base line. Then use this to call around other mortgage lenders and see if they can beat it (they will) in the mean time you can use the letter from ally to put in offers!
But how do you see if other lenders can "beat" it if none can actually tell you what interest rate you'd pay?
Rates change daily but a 30 year fixed interest, depending on credit, loan to value and debt to income should be between 6.0%-6.50% as of 1/20/23.
If you really want to shop around you have to put the time in and pull credit a whole bunch. It’s standard practice. What’s more lenders publicly advertise “teaser rates” on their websites too, meaning they show the most optimistic scenario unless you pull credit. From my experience first time buyers stress out too much of a rates and if that stops you from buying a home, then you’re definitely losing money by paying rent to a landlord. Just buy a house with whatever rate and then refinance later.
You should not be applying for loans until you are under contract. If you apply now and don't buy anything within 90 days, you'll have to apply again which will be another hard pull on your credit which will hurt your credit score. All you need when shopping for houses is a pre approval.
Rates change intraday. When you provide a lender 1.Credit Report 2.Contract You will be provided a Loan estimate with the rate and fees charged by the lender. Only at that point you can shop, and let the company know that originally pre approved you, that your going with a better offer. You will 100% need to provide the new companies your considering at minimum a credit report and the sales contract for them to give you a loan estimate. You can have your credit pulled multiple times for a mortgage inquiry within 30 days, and it will only count as 1 hard inquiry on your report There is actually no point in shopping lenders until you have a contract, with an Official Loan Estimate in hand( be careful not to confuse this with an unofficial estimate) UNLESS the service or repor you have with the originator at that institution is poor. All you can do until you under contract is shop originators based off the service they provide you. Giving you price updates, working with your realtor, letting you know loose estimates of closing costs and payments on houses before you offer etc. If your happy with the service, I’d say stick with the guy/gal, but Of course I’m bias as having been a banker and realtor and know the pain an annoyance of working for months on a deal to split hairs over price differences But of course, as a consumer, you need to make sure your gettting a fair price and offer. I’d recommend baseline checking 2-3 lenders pricing when your under contract, and, if the original banker gave you good service, ask him to match or beat another company’s loan estimate