Low pre-approval

posted 3 years ago in Home
Post # 2
Member
7075 posts
Busy Beekeeper
  • Wedding: August 2012

Did they give any reasons why they gave you that amount? Are there any debts you could pay down in the mean time?

Post # 3
Member
8419 posts
Bumble Beekeeper
  • Wedding: April 2013

savealife:  Sorry to hear that, but have you tried some other lenders?  You could also ask why the mortgage company isn’t willing to approve you for more and work on those aspects (i.e. credit, down payment, debt to income ratio, etc).  You may also want to pull your credit report to make sure that everything is accurate.  In my experience, mortgage companies tend to pre-approve for more than most people could comfortably afford so I would definitely shop around.  Best of luck!

Post # 4
Member
13004 posts
Honey Beekeeper
  • Wedding: June 2011

$2000 in rent does not include property taxes too, which is normally escrowed and is included in mortgage payment.  I’m not sure how crazy your property taxes are, but we pay about $750/month in property taxes, so if $2000 rent was affordable, minus taxes, then that leaves just $1250 for the mortgage payment which could significantly reduce how much you’re approved for.

Post # 5
Member
5697 posts
Bee Keeper
  • Wedding: August 2012

Well there has to be a reason for that. Did they say? Credit scores or do you have debt etc?

Post # 6
Member
3756 posts
Honey bee
  • Wedding: April 2014

Do you have a lot of debt? What does your credit history look like. Did you pull your credit reports to make sure they are accurate before getting pre-approved? Did you apply together for the pre-approval or just one of you? I’d definitely shop around but also it’s good to really understand what your credit picture looks like so you know what you can truly expect to be pre-approved for. Also keep in mind that a pre-approval doesn’t mean you’ll actually qualify for whatever loan program you end up applying for. You should look into the different loan programs (FHA, conventional, USDA, etc) and make sure you meet all of the criteria that’s required, especially debt-income ratio. We just barely made it in to our loan program because our debt-income ratio was borderline.

Post # 7
Member
3044 posts
Sugar bee
  • Wedding: September 2016

There is probably a reason behind that amount they are willing to lend you. I would buy a house you can afford and either pay extra into the mortgage or save the rest of the $2000 so that in 2-5 years you can afford to move into that dream location house. It is normal to have a smaller house when you are starting out to help you save up, that is why it is called a starter house. Plus what happens when one of you gets sick or laid off and cannot work? 

Post # 8
Member
3044 posts
Sugar bee
  • Wedding: September 2016

Not to mention: as a homeowner you need more of a savings cushion for replacing appliances, repairs, maintenance etc. so the amount you would normally put into rent is not the same as the amount that goes into a mortgage.

Post # 9
Member
7281 posts
Busy Beekeeper
  • Wedding: October 2011 - Bed & Breakfast

I’ll chime in with the chorus of “More information is needed.” Why were you approved for a low amount? Is it because your downpayment is small and this particular lender wants a better dp/loan ratio? Is it because of low credit scores? Is it because you haven’t been at your jobs very long? Is it because of inaccurate information on your credit report? There are so many factors at play in a pre-approval, so we can’t give good advice without more info.

That said, lenders typically approve for more than someone can comfortably afford, not less. So your situation is a bit odd and should be thoroughly explored. Our lender said they would comfortably approve us for practically double the amount that we were asking for.

Post # 11
Member
6866 posts
Busy Beekeeper
  • Wedding: March 2014 - A castle!

savealife:  I think you’re being smart in going with a cheaper house and paying off the student loans first. At the same time, you’ll be putting equity into your starter home, and can “transfer” that to your dream home one day. $115k does seem kinda low though if you both have incomes and great credit. 

Post # 12
Member
13004 posts
Honey Beekeeper
  • Wedding: June 2011

savealife:  Right, it’s not factored into the $2k rent, but you DO need to factor into cost when you buy a place.  So if you were assuming you could get a place with a $2k morgage, and then you add in property taxes, your monthly payment could be anywhere from $2500-3000 depending on how high property taxes are where you are looking.

Post # 14
Member
3756 posts
Honey bee
  • Wedding: April 2014

Ah, yeah the outstanding debt is the killer. That’s a bummer that you are doing fine financially but that’s holding you back. Definitely start out smaller and bust out those loans. You’ll have your dream home before you know it! 

Post # 15
Member
949 posts
Busy bee
  • Wedding: October 2015

Maybe you could hold off a bit and save up for a bigger down payment? If you don’t have at least 20% down payment (in Canada) you will need to end up paying an insurance premium on top of the mortgage and you won’t be able to get a conventional mortgage.

$15, 000 seems like a very small amount of money for a down payment to me. I guess it depends what is typical in your area.

My SO and I bought a house last summer and we were surprised at how tough it was to get a mortgage. We have good incomes, no debt, good credit and a > $100K down payment and it was still a struggle. We literally asked the lady at the bank, how do so many people manage to get houses when it’s this hard for us??!!!

I was very surprised by all of it as a first time home buyer and it was so stressful and I was pretty upset about the whole thing

Maybe try some different banks until you are satisfied. We didn’t because SO insisted we get the mortgage through his bank and maybe that was part of the problem lol

Good luck and don’t give up!

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