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I'm considering buying a house, but I'm very early in the process so I don't want to commit to anything yet. I noticed that my bank (USAA) has an option for mortgage pre-qualification, and I'm curious about what kind of interest rate I qualify for. This process requires that I grant the bank permission to pull my credit score (which is excellent).

Is this a good way to determine what interest rate I can get, or is there a better alternative? What are the potential downsides? I'm looking for a "hard" number, not just an estimate.

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    Be sure that whatever 'pre-mortgage' rate you get from the bank is actually one they would be legally held to keep; it is possible that a 'pre-approval' or similar would be good enough to give you some indication of how much the bank would be willing to lend and how much a bank would want to charge you for it. But when you actually go to take out the mortgage, they may not be bound by those figures. – Grade 'Eh' Bacon Jun 16 '16 at 20:35
  • No point on insisting on a hard number (not an estimate) at this point. Interest rates are as likely to change as your credit score between now and purchase time so unless you lock in a rate now, any number you get is an estimate. – farnsy Jun 17 '16 at 5:13
  • Keep in mind that a USAA mortgage is just a GMAC mortgage. I know from experience. – Pete B. Jun 17 '16 at 15:17
  • Do they not have their rates posted online? Most places will at least tell you what their best rates are. – BrownRedHawk Jun 20 '16 at 13:30
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Only real downside is that pulling your score may slightly reduced your score. So you might just want to ask them for an estimate, assuming an excellent score; that'll be close enough for now.

The time to get pre-approved is when your actually ready to start shopping for a house.

  • Supposing that the pre-approval expired before you found a house to settle with, you would end up needing a second - would the system notice that you already got a pre-approval and it expired, or would you get an approval with a dinged score? – user2813274 Jun 17 '16 at 2:16
  • Usually if someone has given you a professorial they'll be glad to extend it without needing a new data pull.. the main reason for getting it is that some sellers won't talk to you unless you have some evidence you can actually come up with the money. (This may be different in areas where the market isn't as hot.) – keshlam Jun 17 '16 at 3:06
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Well, it is a great opportunity to see your most likely rate and your buying power but it also just pre-qualifies you. A pre-approval is stronger and means your income, credit and assets were reviewed by an underwriter. Anybody can get pre-qualified. More things can turn up during the approval process, like a collection you thought you never had, a tax lien, switching from W2 to 1099 income may present a problem, bonus income may not be counted and so on.

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In the UK, when a search of your credit record is done, it is recorded. It is not recorded if the search was for a mortgage or just a normal personal loan. If you take out the personal loan, it can be a few weeks before it shows up on your credit report.

Mortgage lenders don’t like people that take out personal loans for deposit, or moving costs etc. They also don’t like anyone with lots of personal loans.

Therefore allowing a mortgage provider (or advisor) to do a credit search on it, can make it less likely that other providers will give you a mortgage.

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