H and I are hoping to finally buy our first house soon. We moved to DC in October, I have been continously employed but got a new job that started in February. H's job ended in February. He has had multiple rounds of interviews with a place and was told yesterday to expect a formal offer this week, which he'll accept when it comes in.
Our current living situation is not ideal, and we are dying to get into a house. Inventory seems to be low and with Covid, everything is going to take longer, so we just want to get going on the process as quickly as possible.
We've pulled our credit and have the downpayment and have a general understanding of the overall process. But the actual specifics of how pre-approval actually works is confusing to me.
Can you explain it like I'm five? for example, do you submit pre-approval applications to a few places? How do you decide which place(s) to obtain pre-approval from? Is this all done online or do we have to mail all this stuff in? How long does it usually take? Can you be preapproved with an offer letter or do you need actual paystubs? Should we find a real estate agent now while waiting for that process to play out, or will they require preapproval before talking to us? Is there anything else about pre-approval that you think first time home buyers should know?
I know we aren't bound to get our mortgage from whatever place gives us the pre-approval, and will have questions down the road about actually getting the mortgage. Right now, I'm just trying to figure out how to do this first step right.
You can submit a pre-approval to a few places - in fact, I think that's what's recommended. I actually only submitted to 1 place because I misunderstood the process, so it's good you're asking! I had thought that we just needed to be approved by 1 lender to house hunt, and that we could look for another lender later. Turns out that had we switched lenders after the offer, our seller could have actually terminated our agreement. So - check multiple lenders before you go out looking for sure. Our realtor strongly urged us not to switch lenders since we were in a multiple offer situation and apparently the seller picked us partly because our mortgage company has a good reputation for closing on time.
I was able to do it all online/over the phone. I did have to attach several scanned documents, like pay stubs and tax returns, but I didn't have to mail anything at all. I think it took a matter of hours to get approval. An offer letter was fine for us - my H hadn't received a paycheck yet from his new job when we got pre-approved, but we did have to submit pay stubs from his previous job and the offer letter for the new one. We later had to provide actual pay stubs from his new job before closing.
Your real estate agent can probably recommend lenders that they've worked with in the past. They will recommend getting pre-approved, but will definitely speak with you before your pre-approval. They probably won't take you out looking at anything without it, though. We used First Home Mortgage, which I believe services DC too and we had a very good experience (if you want I can put you in touch with my specific mortgage guy). He was very helpful walking me through the application and answering questions. We had zero problems closing because they were super on top of getting everything from us. I hear this is not always the case.
My real estate agent actually works out of an office in DC, so if you don't already have an agent picked out, I could actually give you her name too.
You can submit a pre-approval to a few places - in fact, I think that's what's recommended. I actually only submitted to 1 place because I misunderstood the process, so it's good you're asking! I had thought that we just needed to be approved by 1 lender to house hunt, and that we could look for another lender later. Turns out that had we switched lenders after the offer, our seller could have actually terminated our agreement. So - check multiple lenders before you go out looking for sure. Our realtor strongly urged us not to switch lenders since we were in a multiple offer situation and apparently the seller picked us partly because our mortgage company has a good reputation for closing on time.
I was able to do it all online/over the phone. I did have to attach several scanned documents, like pay stubs and tax returns, but I didn't have to mail anything at all. I think it took a matter of hours to get approval. An offer letter was fine for us - my H hadn't received a paycheck yet from his new job when we got pre-approved, but we did have to submit pay stubs from his previous job and the offer letter for the new one. We later had to provide actual pay stubs from his new job before closing.
Your real estate agent can probably recommend lenders that they've worked with in the past. They will recommend getting pre-approved, but will definitely speak with you before your pre-approval. They probably won't take you out looking at anything without it, though. We used First Home Mortgage, which I believe services DC too and we had a very good experience (if you want I can put you in touch with my specific mortgage guy). He was very helpful walking me through the application and answering questions. We had zero problems closing because they were super on top of getting everything from us. I hear this is not always the case.
My real estate agent actually works out of an office in DC, so if you don't already have an agent picked out, I could actually give you her name too.
This is super helpful, thank you so much!!! And yes, if you want to PM these people's names, I would appreciate that.
You can submit a pre-approval to a few places - in fact, I think that's what's recommended. I actually only submitted to 1 place because I misunderstood the process, so it's good you're asking! I had thought that we just needed to be approved by 1 lender to house hunt, and that we could look for another lender later. Turns out that had we switched lenders after the offer, our seller could have actually terminated our agreement. So - check multiple lenders before you go out looking for sure. Our realtor strongly urged us not to switch lenders since we were in a multiple offer situation and apparently the seller picked us partly because our mortgage company has a good reputation for closing on time.
I was able to do it all online/over the phone. I did have to attach several scanned documents, like pay stubs and tax returns, but I didn't have to mail anything at all. I think it took a matter of hours to get approval. An offer letter was fine for us - my H hadn't received a paycheck yet from his new job when we got pre-approved, but we did have to submit pay stubs from his previous job and the offer letter for the new one. We later had to provide actual pay stubs from his new job before closing.
Your real estate agent can probably recommend lenders that they've worked with in the past. They will recommend getting pre-approved, but will definitely speak with you before your pre-approval. They probably won't take you out looking at anything without it, though. We used First Home Mortgage, which I believe services DC too and we had a very good experience (if you want I can put you in touch with my specific mortgage guy). He was very helpful walking me through the application and answering questions. We had zero problems closing because they were super on top of getting everything from us. I hear this is not always the case.
My real estate agent actually works out of an office in DC, so if you don't already have an agent picked out, I could actually give you her name too.
This is super helpful, thank you so much!!! And yes, if you want to PM these people's names, I would appreciate that.
Real estate broker here. I would recommend you first talk to a real estate broker. They will be able to refer you to a mortgage broker. For now, I would just get pre-approved with one mortgage broker. Whether they will want pay stubs and other docs will depend on the broker. You should be able to do everything online.
You can house shop with that pre-approval letter. Once you are under contract, you can then shop your mortgage. You will have all the details then so will be able to get a better comparison. Just make sure that the brokers aren't all running your credit. If you have a good mortgage broker, they should be shopping this around and getting you the best deal, but it never hurts to do some of your own homework.
I just saw what wildrice said about the seller having the option to cancel the deal if you switch mortgage brokers. That's not the case in either of the markets where I've worked, but I've never worked in DC. If that's the case there, then you will want to do more mortgage shopping before you submit an offer.
There's no need to get pre-approval from more than one lender. Think of it as proof that you're able to get a loan, and you only need one data point to show that. I've always done it remotely and usually have to submit a bit of paperwork but not as much as you would for a full loan--what's required will depend on the lender as scout8 said.
You can concurrently start reaching out to agents and figuring out who you want to work with. I interviewed several on the phone before deciding.
You don't need to shop for the mortgage until you find the house you want. The lender will need to know how much you want to borrow, what % of the home value that is, and other things you won't know until you zero in on a property. Also, rates are always moving around so there's no sense getting a quote until you're close to wanting to lock it in.
From someone who works on the mortgage side of things:
- to get a complete quote/initial disclosure so you can compare fees/APR/as well as the rate itself, any lender will HAVE to run your credit. you need a full application to provide an LE and credit score is one of those things.
- pre-approvals serve a few reasons. they provide the seller with some confidence that you qualify to borrow the money you need to purchase their home / acquire credit, to make your offer a viable offer. but it also moves a lot of legwork on the mortgage fulfillment side to the front of the process so you have a clearer understanding of being able to meet a purchase contract date/escrow date. if you start shopping for lenders after getting your offer approved, you run the risk of not closing in time.
- yes, rates are always moving around, but chances are that lenders will move their rates comparably against each other, so again, I would shop around sooner rather than later. rates are going to be what they are when you buy a house. you want to find a lender that has competitive rates against their peers.
There's no need to get pre-approval from more than one lender. Think of it as proof that you're able to get a loan, and you only need one data point to show that. I've always done it remotely and usually have to submit a bit of paperwork but not as much as you would for a full loan--what's required will depend on the lender as scout8 said.
You can concurrently start reaching out to agents and figuring out who you want to work with. I interviewed several on the phone before deciding.
You don't need to shop for the mortgage until you find the house you want. The lender will need to know how much you want to borrow, what % of the home value that is, and other things you won't know until you zero in on a property. Also, rates are always moving around so there's no sense getting a quote until you're close to wanting to lock it in.
As a Realtor I do not take clients to look at a house until I have their preapproval letter. Especially now with Covid. Reason being I don’t want to take them to a house 75k over what they can afford, and then they fall in love with it...and guess what? Nothing that they can afford compares then. And now, with Covid, more and more sellers are asking for only preapproved buyers to be shown the property to limit contact. I also see listing agents asking for only decision makers to be at showings (only those on the mortgage- no kids, no parents). As far as the preapproval process goes, pick a Realtor first, then ask for their recommendations for a lender. We typically refer to lenders we’ve worked with many times and that trust to get the job done correctly. Bad lenders can cause a buyer to lose a home. I can recommend a great agent in the DC area if you need one.
There's no need to get pre-approval from more than one lender. Think of it as proof that you're able to get a loan, and you only need one data point to show that. I've always done it remotely and usually have to submit a bit of paperwork but not as much as you would for a full loan--what's required will depend on the lender as scout8 said.
You can concurrently start reaching out to agents and figuring out who you want to work with. I interviewed several on the phone before deciding.
You don't need to shop for the mortgage until you find the house you want. The lender will need to know how much you want to borrow, what % of the home value that is, and other things you won't know until you zero in on a property. Also, rates are always moving around so there's no sense getting a quote until you're close to wanting to lock it in.
This one may really be market dependent or maybe even influenced by the current COVID market. I think maybe the real answer here is to find a realtor and ask them whether it's ok to shop around for mortgages after an offer or if you need to do it before. I had always thought the pre-approval was just to show you could get a mortgage, not that you're committed to one company, but my realtor really emphasized that switching lenders from the one we got pre-approved with after going under contract would put our contract at risk. Maybe she's nuts, I don't know, but in this tight market I decided to go with her expertise. I would just hate for you to assume the same thing I did and then end up locked into something you didn't want.
In my case I think it worked out fine - our mortgage company was great and we got a very competitive rate. But that may not always be the case.