Qualification and Second Lender

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  • #79277
    mechtek133
    Participant

    What would NACA do if I had a hard inquiry on my credit report because I applied for a different mortgage with another lender ?, after being qualified for a NACA loan. How would I be able to continue with the NACA Program or would I be disqualified ?
    What would applying for a mortgage through another lender do to my NACA membership ?

    #79278
    Nelsont
    Member

    You are allowed to test the waters and get pre-approved. Write a letter of explanation and you’ll be fine.

    You cannot apply for the other loan. Make sure you have your terminology straight. You are probably better off than you think. You cannot apply for any mortgage with any bank regardless of program or situation without having a ratified contract offer on a house. You also cannot apply for 2 mortgages at once. That other bank will tell you the same thing that naca will tell you. The other loan application will appear as debt and you’ll likely be denied both loans because you probably can’t afford 2 mortgages.

    #79288
    calendarsjune
    Participant

    great

    #79289
    mechtek133
    Participant

    Thank You Nelsont, but does that mean that if I have been qualified by NACA but I haven’t signed a contract on a home. That I can sign a contract with another mortgage company, to purchase a home ? The affordability is the issue, and another lender has offered down payment/closing cost assistance. I just want to check all the options that I have.
    Thank You for your assistance.

    #79290
    Nelsont
    Member

    You can be qualified by 100 different banks. You can put in 1 offer and apply to 1 loan.

    The qualification/pre-approval is good for a set amount of time. Usually 30 days for a preapproval and 6 months for a naca qualification. If at any time your loan application falls through you can go onto the next one within that given time frame if the seller is gracious and doesn’t back out of the contract.

    #79317
    Anjulwyngs
    Participant

    @Nelsont

    Hello! I’m in a similar situation as the original poster but your response is a bit confusing to me. Please clarify.

    “You cannot apply for the other loan”
    “You can be qualified by 100 different banks.”

    Question: Don’t you have to “apply for a loan” first (with any lender) in order to be “pre-approved/pre-qualified”? Does NACA frown upon getting “pre-approved” with other lenders while working with a NACA MC? My CU and Mortgage Broker both have seemingly competitive programs that I would like to explore while waiting to get NACA Qualified.

    #79318
    mechtek133
    Participant

    @Nwlsont:

    Question: Don’t you have to “apply for a loan” first (with any lender) in order to be “pre-approved/pre-qualified”?
    yes, you need to pre-qualify witha lender to get a loan with any other bank besides NACA.

    Does NACA frown upon getting “pre-approved” with other lenders while working with a NACA MC?
    I don’t know the answer to this, I have asked another bank for pre-qualification, but I haven’t said anything to NACA.

    My CU and Mortgage Broker both have seemingly competitive programs that I would like to explore while waiting to get NACA Qualified.
    I am looking into a loan and they are paying 3% of my downpayment and all non-recurring closing costs. So they also have competitive
    loans.

    #79319
    Nelsont
    Member

    @Anjulwyngs A pre-approval is not a loan application and it’s part of the reason nearly 1 third of all loan applications are declined why most contracts fall through and why NACA can virtually guarantee a loan.

    To get pre approved you provide pay stubs and bank statements. In about 30 minutes a loan advisor not necessarily an underwriter will determine your current income and debt can manage a specified mortgage payment.

    When you go to apply for the loan your credit is pulled and a full underwriting taking many days of sifting through all your finances occurs. Also the credit pull shows up as an active loan on your report.

    The reason you cannot apply for the loan without a ratified contract offer on a house is because part of the underwriting process is specific to the house you want to buy. Is it up to code is it in the flood plane what are the taxes and insurance etc etc. All of this affects the money you have to spend which can affect whether the bank wants to loan you money.

    You cannot work with any agent or put an offer on a house without first getting pre-approved. Pre approved is as mentioned not approved. Its simply a voucher stating you can afford this much. It does not say you’re worthy of the loan.

    NACA qualification process is actually more in depth than a loan application underwriting.

    NACA encourages getting pre approved from other banks.

    #79320
    mechtek133
    Participant

    @Anjulwyngs, Thank You for the Information.

    BOA is offing to pay my 3% of 5% downpayment and all non accruing closing costs therefore bringing less cash to closing.
    The APR is almost 6%. It’s more availability than NACA is offering. NACA is only offering 31% of my income. Where some
    conventional loans offer up to 50%.

    I know that it’s only a pre-aprovial and NACA is a qualified letter.

    #79321
    Nelsont
    Member

    @mechtek133 I think you have that confused.

    Your total DTI can be up to 45 or 50%. That includes car loans student loans and cable bills. You will be approved for about 35% DTI mortgage payment which includes PMI which is 2 to 4%. This is a government regulation.

    #79322
    mechtek133
    Participant

    Nelsont, Thank You for all of your help. I have zero debt making my DTI 0% right now and NACA only allowed my availability to be 31%
    making my DTI 31%. It’s just not enough. So I looked into a conventional loan at BOA and they are actually being very helpful. I am
    aware of the difference in the APR, but it allows me a larger affordability. I have asked my HC for a larger affordability and I was
    told that NACA would only allow about a third of my income as availability. I am on a fixed income so my affordability could bee more
    than a third of my income and I could still live comfortable. NACA is a great program and I truly believe in it, but it won’t help me.

    #79323
    Kristijay
    Participant

    You can get pre approved at as many banks as you want to compare out of pocket costs, loan terms etc. They will show up as a hard pull on your credit and you would need to write an LOE for NACA indicating that you were shopping around Applying for a loan is not the same as closing on a home. You won’t have a home loan show up on your credit until at least a month after your actually close, so nothing would affect your DTI unless you buy the home. Even if you go all the way through underwriting and the loan falls through. Nothing is going to be on your credit until you close especially not just an application.

    #79324
    Nelsont
    Member

    @Kristijay this makes sense however that is not what happened to me. I had to show proof I didn’t have an active loan by getting a letter from the bank stating it was just a credit pull. Because it did indeed show up as an active loan.

    #79325
    Kristijay
    Participant

    @Nelsont You applied for a mortgage to shop around for rates and loan amounts and it immediately showed as an open loan on your credit with a balance? That is abnormal and likely a credit reporting violation. What bank/lender did that? They should have done no more than a hard pull to determine your DTI. Did you have to contact the credit reporting bureaus to get it removed from your credit? I have never heard of that happening before. Hard to believe honestly.

    #79326
    Nelsont
    Member

    Correct. It’s actually happened to me twice. Once with Wells Fargo through FHA for my first house and once through a local credit union for my 3rd house. That’s when I decided on NACA. I didn’t get it removed because it hasn’t been questioned except for those 2 incidents.

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