Planning To Use The $8,000 Tax Credit? It’s Time For A Re-Pre-Approval.

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As the federal home buyer tax credit nears its April 30 end-date, there's a lot of would-be home buyers in Cincinnati, Chicago and elsewhere working hard to get under contract.

What's A Re-Pre-Approval?

If you're among them, a piece of advice : If your pre-qualification and/or pre-approval letter is more than 8 weeks old, get yourself "re-pre-approved". Mortgage guidelines have been in flux and your original lender letter may now be invalid.

As examples, over the past half-dozen months, the majority of lenders have reduced risk tolerance with respect to:

• Maximum debt-to-income ratios : Now capped at 45%
• Minimum allowable credit scores : Heavy penalties starting below 740
• Calculation of "assets in reserve" : Only 60% of some assets can "qualify"

For buyers of condominiums and certain townhomes, even the subject property itself comes under tougher scrutiny.

You Only Get One Chance To Claim The $8,000 Tax Credit

Today's mortgage applicants need to be a complete package. It takes more than just good income and credit to get approved anymore and today's buyers would be prudent to revisit their qualifications.

What passed underwriting in January may not pass in May.

Being pro-active brings other advantages, too. If a mortgage re-pre-approval does unearth an issue, addressing and correcting it up-front will be simpler than trying to clean it up once a home's already under contract. If things fall apart after the April 30 deadline and you lose your claim on $8,000 -- tough noogies.

How To Get Re-Pre-Approved For Your Mortgage

Talk to your loan officer about a pre-qualification/pre-approval letter before you bid on a home. The loan you save may be your own. Or, request a lightning-quick pre-approval from my mortgage office.

I pre-approve mortgages via email and telephone.

(Post licensed and adapted from Bring the Blog)