Mortgage advice, if you please

Been in my first house since 2001. Was supposed to be a live-in and flip, but then the crash and life happened, blah blah. I've built a big shop and generally love it here, but I've outgrown the house and pretty much the perfect house for me is going to be for sale soon (friend is a realtor, knows the seller). I've been out of the game for so long I'm not sure what safeguards to take and what the standard practices are. I have good credit and a good amount of equity (well maybe not compared to some of the ballers here lol). I will be putting 20% down, using the sale of my existing house. If I can't do that, I can come up with maybe 5%. I have some credit card debt that was gifted to me during a divorce 5 years ago, but I'm nearly done with that. No judgements, bankruptcies, etc etc.

My concern mainly is shopping for the best mortgage. Is every place I go to pre-qualify for gonna run a hard inquiry? I don't want that on my credit, especially since I'm (hopefully) about to enter the home buyer market again. How do I shop this without it negatively effecting me? I've been out of the process so long long I don't even know if the questions I'm asking are stupid common sense.

Any guidance appreciated.

 

@Gmay99 should be able to help ya

 

Good call, forgot about that.

 

+100 on Geoff

 

Local Credit Union.

 

Call Geoff- dude doesn’t mess around.

 

Yeah, either a guy like Geoff, or a local bank with 1 or 2 locations, will eat this shit up. This is their bread and butter and they're eager to help.

Also, you're free to rate shop for, I think, a couple days without it dinging your credit. Or you can simply call around and ask their rates. With the market, you'll need to have all of this in order, and be approved and ready when the house becomes available. There's no inventory around here.

Is the realtor friend going to be brokering 3 sides of this transaction?

 

Try to narrow down the potential lenders to just a few, then do the pre-approval with your pick. If your scores are 720-740+, you'll get the lowest rate possible across all the banks. Interest rates and scores are grouped in tiers....600-650 will get you a rate, 651-690 another, 691-719 and another, etc ....(those numbers aren't exact, but you get the idea).

The lender will pull all (3) CRA's reports, TU, EX, EQ and leave you with 1 Hard inquiry on each. They will take the median score to base your preapproval on.

Just like when car shopping, all inquiries within a 30 or 45 day period should be scored as a single Hard inquiry on each report.....but, it all depends on how the banks 'code' the request for your reports.

Banks, insurance companies, credit card companies, etc....are constantly doing 'soft' pulls on each and every one of us. Where do you think all those mail in offers and pre-approvals that you get in the mail come from? Point is, you can ask each lender if they can do a soft vs hard pull on your credit.

Hard inquiries impact your score the least of all other factors in the FICO algorithms. 1-3 new inquiries will ding you a point or two....4-7 a few more points, etc....They stay on your reports for 2 yrs but are not factored into FICO scoring after 1 yr.

Somebody can have 50+, 100+ hard inquiries on their reports....if their credit file supports what they owe, borrow, etc, inquiries really don't matter. Having said that, i'm in the process of having inquiry free reports on all 3. That means no new credit in 2 yrs. Not as easy as it sounds.

 

In addition to the mortgage and credit side of things, also make sure you get a rock solid home inspector to go over the house you're looking at with a fine tooth comb and identify any major issues that could cost you a bunch of $$$. I got burned on the first house I bought because the inspector was in cahoots with the real estate agent and lender. Lesson learned. Never again!

 

So with your 30 credit cards and obsession with credit scores, what have you gotten your score up to? And was it worth all the time and effort?

 

I wouldn't call it an obsession, more of a game. Each credit card companies have their own quirks and styles so to speak. AMEX has a 3x your current credit limit after 90 days. Meaning, if you have a $6000 AMEX card, on day 91, ask for a CLI on your online acct and with a soft pull, you will most likely get bumped up to $18,000 as long as your credit scores/file didn't turn in a negative way since you opened that acct. Comenity Bank (Total Rewards VISA) will give out CLI's every 4th statement without affecting your score. You can bang the Discover CLI button 10x a day, and you'll never know when they'll bump it up, no rhyme or reason with them. Walmart CC, if you ask for small $500 or $1000 CLI's, it will give them out one after the other, but if you ask straightup for $5000, it may deny you. Tricks like that are common but you do have to stay informed on the credit boards to learn that shit.

I had credit early on as a teenager...mom cosigned for a loan for a quadracer, a few small store cards after graduation, bought a house in early 20's, etc.....then the dirty 30's came and threw it all away.

Re-established credit 10 yrs ago. I'm at 763-ish...that's because of so many accts affecting my AAoA (average age of accts) and overall short credit history. My AAoA is only 4.6 yrs or so. Time, no new credit, and maintaining low CC utilization is what will increase my scores....and everybody elses as well.

 

I guess I would call anyone who frequents those fico forums obsessed, I've read them for entertainment and can't believe people devote so much time and energy into something so insignificant. As someone who stopped caring about a stupid number years ago, why does it matter?

 

I haven't logged into myfico forums in over a year...turned off fico alerts on my phone too. When i'm laid off 3 months out of the year, gotta waste time doing something. May as well learn how to improve credit to get lower interest rates thus saving money. Makes sense to me. Being informed is being armed, right?

Once you hit 720, scores don't matter. 720 is as good as 800.

Keep in mind, for me, once having great credit, then pissing it away, and now having a 2nd chance at it again, i make sure i understand it better and know how to take care of it. I also have Dave Ramseys books, but unless you're a gazillionaire, credit is needed.

 

Something I never thought I needed until recently is to have an attorney review things before closing. We found some obscure, old deed restrictions on our property that were on the original deed and recorded at the courthouse, but never came up during closing and did not show up on the deed that recorded at closing. Now they are becoming an issue and it's going to cost a lot more in legal fees to get it resolved. You can go down to the courthouse yourself and pull up any documents that are on file and hopefully not miss anything.

 

Shouldn't that have been discovered from a title search? If not, doesn't your title insurance cover you?

 

Lending Tree lets banks compete for your business and is a soft pull to get indicative rates.

Regarding the home - get two inspectors.

What exactly have you outgrown about your current home?

 

having both homes at the same time may throw your debt/income ratio off, so the 5% down payment may have an effect on the rate.

sounds like it may be in your best interest to get a contingency that you'll close on the new house at the same time you sell/close the old house. This way your debt/income ratio excludes two mortgage payments.

It's done all the time, but also up to the seller/time frame/how hot the local market is. I know realtors are against this because well they don't get their money asap, but if it's all connected, then you may have the advantage. Also, ask for a commission reduction for sure if the realtor is doing it all.

 

Com'n Man! You ask that question on the beeb? He probably probably can't fit a jumbo roll of toilet paper in his master bath.

 

Technically speaking yes, but that is also a bit messy due to how that was all worded and annotated, not to mention the sellers property disclosure and the way the property was listed. That is unfortunately why lawyers are now involved. Bottom line is I was unaware of any restrictions and it is going to cost me money. Assignment of blame will come eventually. I do believe a lawyer reviewing things at closing could have caught this but I also think the title company should have done a better job.

 

Good timing as I'm looking to buy a house where I live now soon.
What do guys think about not using an agne to buy and telling the seller his agents fees(closing) are on him? I've bought and refi'd so this isn't my first rodeo.
I've been looking and found a couple houses I may want to pursue and am thinking of going alone this time to try and reduce costs.
Will the sellers agent insist on higher commission, thus negating this strategy?
Thoughts?