Thursday, May 15, 2014

5 Common Mortgage Loan Pre-Approval Myths Debunked

Many first time home buyers have concerns, not only about finding the right home, but also about the Lake of the Ozarks mortgage loan pre-approval process.  If you haven't gone through the process before, its completely normal to be apprehensive.  Often times you hear things about the process, that probably aren't even true and then have this preconceived idea that the whole process is going to be a nightmare. HomeSourceDallas.com has a great list of common myths about mortgage pre-approvals, as well as to why they are false.  Join us as we debunk some of these common myths below!

1. "Having a mortgage lender pull my credit will hurt my credit score." 


According the developers of the FICO scoring model that lenders use, the score ignores inquiries made in the past 30 days.  Even if that wasn't true, the pre-approval process is inevitable at some point unless you are paying cash or have another form of non-traditional financing arranged.

2. "I don't want to commit to a particular lender, I want to shop around for the best deal/rate on a mortgage." 


Obtaining a pre-approval from a lender gives them the opportunity to earn your business, but it does not commit you to working with them.  A the time of pre-approval, the lender will not ask you to sign anything that commits you to use them for your loan.  In fact, you aren't fully committed to a lender until you sign the documents at closing.  That being said, you want to make sure you have picked a lender well before the closing date.


3. "Having multiple mortgage lenders pull my credit will hurt my credit score."


This would have to be one of the most circulated pre-approval myths out there.  Some lenders will even insinuate this to instill fear into buyers so they won't shop around for other lenders.  The FICO credit score model's company specifically states on their website that mortgage inquiries are treated differently than other types of credit inquiries.  As mentioned above, the score ignores inquiries made within the last 30 days of scoring.  Therefore, if you find a loan within 30 days, the inquiries won't affect your score while you are rate shopping.  Also all credit inquiries made within either a 14 day period for the old scoring model or a 45 day period for the new model are only counted as one credit inquiry.

4. "I already know my credit is good so that means I will be approved for a loan." 


Simply having a good credit score, even a perfect score doesn't necessarily mean you will be approved.  There are many other factors that lenders look at when approving a loan such as income, including the debt-to-income ratio, credit depth, down payment and reserves.

5. "Its easier to find a house first and then worry about getting a mortgage afterwards."


You can find many reasons as to why this statement is false.  The pre-approval process isn't just about getting the approval letter, its about getting important questions answered ahead of time. You need to know the expected down payment, monthly payment, interest rate, expected closing date and how the loan process will work in general before you commit to buying a home.  Without having at least an estimate of these numbers, you run the risk of committing to purchase a home that you cannot afford.  Most sellers and agents will require a pre-approval, they aren't going to take their house of the market if they don't know that you will qualify for a loan; they could miss out on a buyer that is qualified already.

The pre-approval mortgage loan process at the Lake of the Ozarks is actually very simple.  Give me a call today to discuss your financing needs.  I'm committed to working with you every step of the way. I'll discuss financing options, offer competitive interest rates and back it up with the FIRST Class Service you deserve.  Michael Lasson, Your Lakelender opening the doors to your new Lake Home!

I would love the opportunity to help you manage your Lake of the Ozarks Mortgage Loan or refinance.  Give me a call at (573) 746-7211 or send me an email at mlasson@fsbfinancial.com with any questions you may have!!

For Lake area news, resources and tips on financial services, please 


Michael Lasson
Sr. Residential Mortgage Lender
NMLS #: 493712

2265 Bagnell Dam Blvd, Suite B
PO Box 1449
Lake Ozark, MO 65049

Direct:  (573) 746-7211






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