I'm going to be moving out of town and called today to see what it would take to get a preapproval. I called a mortgage broker who requested a copy of my last paystub to verify income, current debt service, SS number, and info about what price range I'm looking for and how much cash I had to put down (20%). I supplied the info via fax and within a couple of hours got notified of "preapproval" at a good rate with 0 points. They said that they used "desktop underwriter". My middle FICO score (according to the new 3 in one w/score) is 675 and my DH's is 653. My reports have 3 paid collections (each) that are 5+ years old and my DH just has 1 recent (6 month old) 30 day late on each report but from different creditors. Scores would be much higher but we've got ~90% utilization that we can't do anything about until our current house sells. Here are my questions for those knowledgable in such matters: - What is "desktop underwriter"? I did a search and read the threads but aside from personal assaults didn't get a lot out of them. - How meaningful is the preapproval? - I told them our FICO scores but I assume that they also ran a credit check to get the preapproval. Does that mean that the old paid collections on my report and the lates on my DH's won't be an issue? - We're going to have enough from the sale of our existing house to payoff all revolving debt 100% in addition to the downpayment on the new house. I'm thinking that the CRAs wouldn't have updated info before we close on the new house so should we wait until after closing? We're hoping to close on the new house within a week or two of closing on the old house. - What else should I be doing (or not doing) right now? Any help or insights would be appreciated.
Desktop underwriter is Fannie Mae automated underwriting. Basically, as long as all of the info input into the system is verified and accurate then it is pretty much a done deal. The credit report is evaluated by desktop underwriter ( we refer to it as DU in the mortgage industry), so you would not have to worry about your credit report. As long as the appraisal comes in ok and the job and assets are verified then you won't have any problems.
So would I be better off paying off revolving debt immediately after getting money out of the house that I'm selling or waiting until after closing on the new house? I can see potential arguments for either but would like to know from somebody knowledgable which is smarter and has less risk of negatively impacting the new mortgage. My choices: 1) Pay off revolving debt, would have downpayment available but smaller cash reserves. Low/zero revolving utilization would give higher scores and therefore possibly better terms. I've heard of rapid rescoring before - is this the kind of thing that it might be used for? 2) Hold cash in bank until after closing because Desktop Underwriter already approved me and the extra cash in the bank would look better. Also, payoffs wouldn't have time to be reflected on my reports and scores. 3) ???
Your current debts have already been taken into account concerning your approval, my advise would be leave it the way it is until you closed. Cash reserves mean alot in a DU approval, so I think you are better off waiting.
I would also check to see what kind of approval it cam back as. There are several different levels of DU approval and they can vary in rate by two to three points.
What exact question should I ask and what sort of answers should I expect? What is good? What isn't? Is there an answer that means that I'm not really preapproved? They quoted me a 5% loan with 0 points so I interpreted that as good.
Well flx 97.100, or community solutions, also want to know if it is an IPC (interested party contribution) loan....just different levels. If they could put that approval in writing then it would hold a lot more weight.
I got a preapproval in writing but don't recognize anything that you wrote as being in the letter. it simply says that I'm preapproved for a loan of $xxx with 20% down. Following that there's a bunch of disclaimers about how it was based on income and credit info but all bets are off if that changes.
