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an underwriter has indicated that my budget is unrealistic. Does this mean too low and too high?

  • October 16 2012 - Staten Island
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Answers (4)

Profile picture for wetdawgs
Best practices:  when one doesn't understand, ask the party who made the statement (or the lender who passed it on to you).    Usually when they say "unrealistic" they are suggesting your expectations for house payments are higher than you can really afford.

Let us know what you learn when you ask directly.

  • October 16 2012
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Yea, I agree with wetdawgs.  As a mortgage broker who dealt with underwriters at many different banks and lending institutions, I must say though that I never heard them use the term "unrealistic" when the client was spending too little... all you hear is Yahoo and clear to close! :)

It is a good idea to review your housing expenses and try to stay under 40% for everything including your Mortgage, Interest, Taxes, Insurance, and even think about your maximum electric, water and gas expenses, and your HOA or Condo fees if any.  If you can get all of that between 35% and 50% of your household income, you should be ok.

  ... But it is wise to stay under 40% so you are not "house poor" with a big house and no money to furnish it or invest in other things.

Good Luck!
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  • October 16 2012
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I'm a little confused.  I have never heard of an underwriter reviewing your household budget.  Usually you deal with a loan processor.  You don't get to an underwriter until you are much further along in the process. 

Your debt ratio is not based on budget.  It's based on fixed payment obligations.

The only time I have seen a household budget reviewed by a bank is during a loan modification.  Are you applying for a loan modification on your current mortgage?
  • October 17 2012
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  • October 17 2012
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