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Getting Prequalified

I recently got pre-qualified for a loan. My husband and I have good credit and we have one income of $87k. We are interested in buying something in Davis, for various reasons. My issue is that the letter of pre-qual says we are only qualified for $275K, although realistically we can qualify for more. He is basing this on a house payment almost $1000 less than the max payment we can actually qualify for. He says he doesn't recommend us "pushing it" considering our rent is fairly low at this time- $1,100. We have a very low debt to income ratio as well .  My concern is that the housing prices are already pretty high in Davis and increasing it seems. I am concerned that we will not find a property for that price & secondly that if we find something higher that we will have problems because our pre-qual is too low.

Any advice?
  • April 27 2013 - Davis
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Answers (4)

Best Answer

Just to clarify, this loan officer will not give you a prequal letter to make an offer on a home you and your husband wants to put an offer on even though you do, indeed, qualify for it?

If so find someone else.

We are all supposed to be fiduciaries for our clients, and protecting our client's best interests is important, but telling someone they can't buy something they are easily qualified for is unheard of. "Payment shock" (the difference between your current rent and the new mortgage payment) is something to consider but your loan professional should consult you on that, not make up your mind for you. 

I hope that helps, at least a little, in some way. 

Sincerely,
Greg Cowart

17 Years Experience
Partners Mortgage
Roseville, CA
  • April 27 2013
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What information/documentation did you provide the lender in order to be  pre qualified?  At $375K loan amount your housing expenses will virtually double, so are you saving $1K monthly currently?
  • April 27 2013
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Profile picture for CA Direct Lending
I think the person who pre-qualified you is out of line by giving you his or her opinion of how much you should spend per month on a mortgage.  There are plenty of lenders and banks out there who will do that for you with their guidelines. 

There is something known as "payment shock" and that is a guideline that will limit your new mortgage payment to a certain percentage over the amount of rent you're paying now. 

Guidelines are guidelines.  You meet them, exceed them or fall within them.  "Pushing it" is a ridiculous term to use when pre-qualifying anyone. 

I would look for another lender and agent who will guide you and advise you through the pre-approval and loan process rather than make borrowing decisions for you. 
  • April 27 2013
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Profile picture for Brian GFL Capital
i would suggest getting another pre qualification letter with the maximum you could spend on a mortgage. when i draw up my pre qual letters i like to put the maximum that a client qualifies for and that way it should open up the market to them. whether they choose to find a home that maximizes their limit is up to them as they make the ultimate decision as to how much they want to stretch their budget but at least it opens up more possibilities, especially in this housing market
  • April 27 2013
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