A Delicate Balance
I've been away from my blog for a few weeks and finally have some time to post a new article. This week we explore the delicate balance needed to get pre approved for a loan. Check back every 2 weeks for new and updated info. Thanks! I look forward to helping. --ZW
Getting pre approved for a mortgage is a delicate balance. There are many factors that go into the pre approval process. The lender you are working with will need to review your income, assets, and credit report to have a base understanding of your situation. With this information we can determine how much you plan on putting down and what a comfortable monthly payment would be for you. Any slight changes in either of these two items can greatly alter ones ability to get pre approved.
For example, if someone wants to put 5% down on a home but they only have enough assets for 3.5%, then we have to use an FHA mortgage product which requires a funding fee at closing and a monthly PMI fee. Based on the monthly payments associated with the 5% down payment scenario they may reasonably qualify for a loan, however, now that we are putting less money down and have the additional costs with the FHA fees, the new monthly payment may not allow the borrower to qualify for a loan based on the amount of money they make.
There is a domino effect when providing a pre approval to a client. The effect each item has on another can determine whether someone is approved for a home loan or not. From raising the loan amount, to lowering the down payment, to making sure the monthly payments will fit within underwriting guidelines, these pieces need to align to ensure confidence in a pre approval.
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