Mortgage Pre-Approval Question...?

passionatepclover

passionatepclover

New member
If you have been pre-approved for a mortgage and have a letter of pre-approval, when you find the house and submit the paperwork to the lender do they pull your credit again? Or do they use the score that your pre-approval was based on?
 
They will pull your credit again and then once more just before closing. Under no circumstances should you run up any balances on existing credit cards or open any new accounts (or even apply for new accounts) until after you have closed on the house.
 
Assuming that you have a binding contract on the table before the pre-approval letter expires, your credit will be checked at least TWO more times before you close. It will be checked once before the file goes to the underwriter and again just before closing, typically the day before you close. If there are any delays in closing (repairs, etc.) it may be pulled one or two more times as well.

This is why any agent or lender worth their salt will tell you to NEVER make any additional credit committments until AFTER you close. I've had three deals go down the toilet after a buyer went out and bought a car or ran up a credit card while their mortgage application was pending. Now they were just outside the limit of their total debt to income ratio and the loan approval was withdrawn.

Do note that these refresh inquiries will not affect your credit score. You do take a tiny hit each time that you apply for credit (2 to 5 points at most) but multiple inquires for the same type of credit, such as a home mortgage loan) over a short period (typically 30 days) only count as one inquiry. Refresh inquiries don't affect your credit score no matter how many are pulled or how long it has been since the first inquiry.
 
Your credit will be checked a number of times during the home buying process. If you're concerned about 'too many credit checks ruining your credit', don't be. Typically you have 30 days of credit checks for the same thing without penalty to your score.. For example, say you want to get a car and are looking around to get the best deal, each place you go to will pull your credit, but because the inquiries are for the same thing, an auto loan and in a few week time span, no penalties. Basically it's put like this - you get one inquiry with penalty (all be it very small, like a couple points - if that) and the rest are freebies. Reason being, credit agencies know people are going to shop around, if they deducted points from everyone every time they went for a car loan or home etc, we'd all have horrific scores.
Keep in mind though, you can only 'shop around' penalty free for one item, home loan, or car loan, or personal loan, etc, if you combine any of those they will be treated as separate inquiries.
Good luck
 
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