Home Buying in Indianapolis>Question Details

Mike, Home Buyer in Indianapolis, IN

Regarding getting preapproved for a mortage:When you get preapproved, are you given a specific mortgage

Asked by Mike, Indianapolis, IN Fri Jul 11, 2008

rate? And if so, is it locked in? For instance, if I got preapproved a 6.1%, then make my offer and it gets accepted, could the lender turn around and raise the rate to 6.5% How does on lock in the rate, and when in the process should one do this?

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Hello Mike,

Prequalification is the loan officer's opinion that you are qualified. Usually this is based on verbal information. This is only gives you a ball park idea of the home prices and payments you could qualify for.

You want to be PREAPPROVED. This requires review of: paycheck stubs, W2's, Federal Tax Returns, Bank Statements and Credit Report. You will have to fill out loan application with Good Faith Estimate. With this DOCUMENTED information, I can get an electronic approval from Fannie Mae or Freddie Mac the largest purchasers of mortgages. The PREAPPROVAL is good for 90 days before your paystubs, bank statement and credit report need to be updated. Many lenders prefer this approval because it expedites the loan process.

The interest rate is not locked in until you have a property address. Most interest rates are locked in for 30 days. If you pass 30 days there is a fee for an extension.

Buying a home and getting a mortgage is very important decision. Price is only one part of the total equation.

Feel free to contact me. 800-217-7781 .
0 votes Thank Flag Link Fri Jul 11, 2008
To answer your question, a pre-approval is only as good as the paper it is written on. You still have an underwriting and most of the time your interest rate floats during that process. I would suggest paying attention to the 10-year bond yield on the day you have your rate quoted. As the yield falls, so should your interest rate. If the lender does not lower your rate, then they probably are making more money off of your loan. Now some lenders will lock your rate when they quote it to you, but all you have to do is simply call them and tell them to lock your rate. FYI, 6.1% is a GREAT rate right now. If it still available, try and lock it for 50 days and get your closing to the table by then.
0 votes Thank Flag Link Fri Jul 11, 2008
Great Question Mike!
Couple of things. Make sure you are first pre-approved vs. pre-qualified. To be pre-approved you need to supply financial s along with signing a set of documents. Now these docs do not obligate you to do business with the company, they are needed to get your approval.

In simple terms, PRE-APPROVAL HAS NOTHING TO DUE WITH RATE LOCK this is very important. Another thing that is very important is to get your closing cost guaranteed in writing! If the broker or banker will not do this run.

Your broker/banker should let you know if your rate is locked (you can't lock a rate without a property). Rate locks can range from 7 to 90 days and even longer for construction. Remember, the longer your lock period is the higher your rate will be. Your broker/banker should provide you with a written rate lock. If not, run.

The only way to insure rate and approval is to deal with a broker/banker that has written guarantees. It is the only way to insure that your cost will not change. Remember while you are not committed to do business the broker/banker is under no obligation to deliver rates or costs listed on the GFE.

While shopping everyone should be about the same. If someone is a bunch lower I am sure that the terms will change at closing (it always happens).

You are not dealing with a pair a shoes or a coffee. You are dealing with your home. Be careful and if I can be of any help feel free to contact me at 317-714-8080 or check out my website at http://www.getmyratequote.com
0 votes Thank Flag Link Fri Jul 11, 2008
Hi Mike,

Once you have an accepted offer, you then immediately contact your lender. You should have done your homework prior to offering on a home, so you are pre-approved for a certain amount of financing and you have an idea of which lender you want to use. I am not a mortgage person, but I believe the rate lock ins (can vary) normally are 60days. Once you tell the bank/mortgage broker you have an accepted contract, they will tell you the rate and then you have to close in that 60day window, which shouldn't be a problem. The lenders I work with around here can do it in as little as 2 weeks in a crunch!

Good luck on your purchase!
Jody Jones
Century 21 Landmark Realty
Elkhart, IN
0 votes Thank Flag Link Fri Jul 11, 2008
Mike -

When you are pre-approved, it is for the rate available at the time of pre-approval, so yes, it could change. I have seen rates differ from morning to afternoon on the same day.

Your rate is not set until you lock the rate. Most lenders require an address to lock the rate. Some will do "address to be determined", but once you lock, you need to find the home you want.

If you find an incredible rate, make sure your lock is long enough to get the loan closed. Sometimes, you can pay extra to lock longer.

Best,
Paula Henry
0 votes Thank Flag Link Fri Jul 11, 2008
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