Post # 1
We are moving states- it has been only 8 months since we closed on our house and we are lucky enough that we will make a profit on our home.
I asked our previous mortgage lender for a preapproval letter based on all of the info from last time (not much has changed except for my current income). Last time we didn’t ask for numbers just said that we needed this much to buy our house and she gave us a letter saying we were approved. This time I asked how much we could get approved for- she sent back 300k- which is absolutely insane I think based on what we make!
Then I realize that she is counting our current mortgage payment towards our dept and we could actually be approved for 400k or more! I think I know why so many people default on their mortgages! They get this high preapproval letter and just go for it. And here I was thinking I might be crazy for looking at 175k houses.
Post # 3
When we got our preapproval, it was more than double of what we paid for our house. Granted, we live in an expensive area, but I also saw why people can easily get in a lot of trouble with their mortgages. We’re comfortable with what we pay now, and I think had we bought up to our preapproval limit, we’d be super housepoor and drowning.
What it boils down to is, forget about the preapproval number and go with what you’re comfortable with. If you were preapproved for 300k but are comfortable up to 175k, tell your realtor your limit is 175.
Post # 4
FI is in a smililar situation. His preapproval plus down payment adds to almost twice what he feels comfortable with! We both feel that it’s crucial to stick to the original comfort zone even though a bigger or nicer place may be tempting.
Post # 5
Oh I definitly will not be utilizing the full amount, I wouldn’t be able to save! My husband last night said we will have to ask our future kids if they want to waive their right to presents for the rest of their lifes in order to have a nice house.
We are going to start looking in the 150-175k range. Perhaps lower.
Post # 6
I hear ya. When we bought our house DH and I were pre-approved for $525K which is crazy!! We ended up getting something in the 300K range.
At least here in Canada they have knocked the amortization period down to 25 years max (for an insured mortgage), so that reins people in a little.
Post # 7
- Wedding: October 2011 - Bed & Breakfast
Yeah, I literally laughed when our lenders told us how much they would be willing to pre-approve us for. We would have had a $5k per month mortgage payment, if not more, since it would be a jumbo loan which always has a higher interest rate and since the property taxes would be even more for such a pricey property. It was all out of sheer curiosity on my part, since we knew we were capping things at at an amount we could afford on one salary if we really needed to. But I just had to ask.
Post # 8
@accorn: I just started the pre approval process for the first time ever. I am glad I read through this thread, definitely helpful.
Post # 9
We chose what we were willing/comfortable spending before even applying for pre-approval. That way we knew where we wanted to be and weren’t ‘tempted’ to consider a higher number.
Post # 10
@springbride23: Thats exactly what I did too. My bank kind of let me set my top budget, and wrote my pre-approval based on that.