Mortgage Preapproval Questions

[Alexis Birmingham]

Hello Everyone! 

I am going to be buying a multi-family home to house hack. I spoke with a loan officer and am in the process of being preapproved for a loan, but I have some concerns to resolve before moving forward in the process... I know the intelligent investors here can help me far more than any internet search.  

For some background information: I am 23, live at home with my parents, and have never bought a home. My plan was to use an FHA loan to purchase a duplex or triplex. The loan officer I have been speaking with is someone who reached out to me after I filled out a form on realtor.com. I had originally just wanted to ask a professional the questions that I had, but the loan officer said everything sounded good and we could go right on getting me preapproved. Amongst my excitement, I uploaded all of my W-2's and tax forms. Now, I just need to sign the preapproval disclosure forms before proceeding. With that being said, I do not want to simply get a home loan from the first person who reached out to me.

I am wondering if I should be getting prequalified for a loan instead of preapproved? I want to talk to more than one lender, but I do not want my credit score to be impacted by having it checked multiple times. Also, what happens if you apply for a loan on a mortgage company website? 

Furthermore, the loan officer I spoke with would like to have me approved for a conventional loan with 3% down to purchase the home rather than FHA. I know this would save money on mortgage insurance, but are there any other benefits? I am planning on living there for a year and repeating the process.

Lastly, any advice for finding the best mortgage lender would be extremely helpful! 

Thank you SO much in advance! 

[David Kelly]

Hello, 

You seem to know more than the average first time homebuyer, which is great!  One thing to note is that you have 30 days to shop other mortgage lenders and all will have the same credit report to work with.  The scores do not change until after that 30 days.  So shop around because it will be well worth the few points that it will drop your score in the end.  

3% conventional may or may not be your best option. Did he run the approval with Fannie/Freddie? The 3% conventional loan (HomeReady or HomePossible) have income limits as well as a lower DTI guideline.

In general, if the mortgage lender is doing a pre-approval they should have gotten all income docs, DL, Full credit report, etc. to figure out a limit on what you can purchase.  Once you have a property picked out then you can get the actual approval based on the property address.  Reach out if you have other specific questions.