Many Austin home buyers are afraid of getting pre-approved for a mortgage loan too early for fear it will hurt their credit score. Are these fears unfounded? The short answer is yes.
Getting Pre-Approved Does Not Hurt Your Credit Score
Getting pre-approved should be the first step in the home buying process and should come before you start seriously looking at homes. The credit reporting bureaus and agencies understand people must get pre-approved for a mortgage loan before they buy a home. Its also very normal for several months to go by from when a buyer gets pre-approved to when they find the house they want to buy. Though pre-approvals impact each person’s credit score differently, its usually not more than a couple of points.
Bottom line – no matter how confident you are in your credit score, income and savings, get a genuine pre-approved first.
When Pre-Approvals Hurt Your Credit Score
When we say pre-approvals don’t hurt your credit score, we are assuming you’ve visited a select few mortgage lenders in a 2 week period. The credit reporting agencies will give you a 2 week (or so) period to run your credit for one type of loan with a few different banks/lenders and it will only count as one inquiry. What you want to do is lump all of them together in a short period of time. Don’t apply for a mortgage loan with a different lender every other week for the next 6 months, cause that will raise some red flags.
Speak to a few mortgage lenders (credit union, mortgage broker, mortgage banker) and select the person and/or loan program that suits your needs best. Then, have that person complete the pre-approval and run your credit. When buying a home, it’s important to have a person you can call and ask questions or seek advice.
My Pre-Approval Is Only Good for 90 Days?
Technically a pre-approval is good for a certain number of days, usually around 90. But, when the pre-approval expires, it doesn’t mean you are starting from square one. All you’ll need to do is submit updated W-2’s, paystubs, income statements and other supporting documentation and you should be good to go. That is, as long as you haven’t gone on any major shopping sprees or gotten yourself into a lot more debt. Submitting updated paperwork is much easier, and takes much less time, than getting a pre-approval from the beginning.
Waiting to Get Pre-Approved Could Cause You to Lose the House You Want
Even after reading this post, I’m sure there are still those of you who say your credit is great, you have a steady source of income and you’ll easily get approved for a loan. This may in fact be the case. However, keep in mind a pre-approval could take a week (or more) to get together. In neighborhoods where homes are selling quickly, this could mean the difference in you getting the house you want versus losing out to another buyer.
Plus, if you have mistakes on your credit report, those can take some time to remedy, even if they are mistakes. Getting pre-approved early will allow you time to correct any discrepancies and recalculate your score. (HINT: Free Online Credit Reports are not as detailed as credit reports run for mortgage loans. Getting your credit report online may not show enough for you to rule out mistakes.)
Considering Foreclosures? Pre-Approvals Are a Must
If you’re considering purchasing Austin foreclosures and bank owned homes, pre-approvals are a requirement to make an offer. Without a genuine pre-approval, your offer will be thrown in the trash. Banks only want to deal with serious buyers, not looky loos. A genuine pre-approval is as good as cash and shows your offer should be taken seriously.
Considering Buying a Home in Austin?
Having helped many many buyers over our combined 58+ years of experience, we know the tricks to make your home purchase as stress free as possible. Plus, we also know how to craft and negotiate competitive offers to save you money. For more about our team of experienced buyer’s agents, check out our Austin Home Buyers section. Then, fill out our Buyer Survey, email us at info@11OaksRealty.com or call us at (512) 827-8323 to schedule a no obligation consultation.