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Loan officer messed up on our pre approval

So my husband got pre approved two months ago for a usda loan. Well we have been looking this whole time finally found a house we love and made a offer and the offer has been accepted. Well now our lender is saying she messed up when we got pre approved and figured more than what my husband makes. So we can't do usda but she said we can do FHA loan.. Only problem is it makes the monthly mortgage payment almost twice as high as it was quoted for the house originally when we made the offer. It was already a little higher than we wanted but thought the house was worth it now it's out of what we are comfortable with payment wise. And now we don't know what to do! It makes me very mad that she did not do her job right because if we knew we were doing FHA we would of looked at cheaper houses so the payment was not as high. I guess my question is what can we do at this point? Does this fall under what's acceptable to back out of the offer if we feel it's too much? Also if they say my husband does not make enough to afford the house with a usda loan I am worried when it comes down to it we won't get approved for this loan either an we will be out more money for the inspection. I feel like I can't trust our lender now
  • April 07 2014 - US
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Answers (7)

Yes, that is true. Most lenders require a two year work history when it comes to second or other part time jobs. This is just a common standard amongst most lenders. Besides that, I am very sorry to hear about your experience with this lender. Also, you have the option to switch to a more experienced lender. I would recommend that you at least gain a second opinion on your situation. Either way, the best thing for you to do is to speak with another knowledgeable lender to see if you can get started on financing a new home. If you need additional assistance, feel free to reach out. Good luck!
  • April 08 2014
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Your situation illustrates the vital importance of accurate and thorough pre-approvals, including verifying creedit, assets, and income and running the loan scenario through an underwriting engine.  Here's an article I wrote for Mortgage News Daily on the topic:
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If you have further questions, I'd be glad to help.  I write loans nationally, and can be contacted through my profile.  Thanks, Ted

  • April 08 2014
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You cannot his second job as income unless he has had it for 2 years.
  • April 07 2014
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switch lenders or loan officers for one that knows what he/she is doing and go conventional-conforming with 5% down or find a bank with a conventional CRA product that allows 0% to 3% down.

FHA may only be 3.5% down but its the gift that keeps on giving, MMI for the life of the loan plus a 1.75% insurance premium at closing.

 
  • April 07 2014
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In order to use a second job as income you do need a 2 year history.  As far as other loan options, you can explore a Conventional loan with 3-5% down.  This would keep your monthly mortgage under what you'd be paying for a FHA loan.  
  • April 07 2014
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Yes, you could back out for that reason if you really don't qualify, but you will need a letter from the lender. Might be worth it to get a 2nd opinion first.

There a few reasons why FHA vs USDA that come to mind.

1. Either your household income is too high for USDA or 2. Your debt to income (DTI) is to high for USDA. FHA doesn't have an income limit and thier DTI% can go over 50%, where as USDA in most cases cap out at 48% or lower.

You say that the FHA mortgage payment quote is almost twice as high as the USDA mortgage payment? Something must be off here. The rate, principle, interest, insurance and taxes should all be the same, albeit the monthly PMI will in fact be @ 3 times that of USDA.

How much is the house you are buying? Do you have the 3.5% down needed for FHA?

  • April 07 2014
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I also wanted to add my husband has a 2nd night job but she told him they won't count that income because he has not had it for two years is that true?
  • April 07 2014
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