Pre-approval/pre-qual/mortgage

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Submitted by bzribee on May 4, 2012 - 3:02am

I went to my favorite credit union to do a pre-qual, which turns out to be a pre-approval (a gazillion questions and paperwork to copy).

Despite a credit score over 80o, a 70% down payment (I hate large monthly bills) and proof of savings beyond the housing cost, they are unhappy with my 60% income vs mortgage ratio or whatever that thing is. It is true my monthly income is low, but that's because I save everything and live VERY cheaply.

I understand about not over qualifying me but right now I"m pretty irritated with them and wondering if I should try a regular (non bank) mortgage company or if it'll be the same thing. Also, that means my credit score is being pulled a lot (also changing car insurance and looking at long term care policies, all of which require credit checks).

AND, how do I choose a mortgage company?

Submitted by bzribee on May 4, 2012 - 3:18am.

Ah, just found absolutemortgageco from refi topic. I'll look at that. Still open to more references and answers to other questions...

Submitted by ljinvestor on May 4, 2012 - 7:49am.

Just ask a mortgage broker instead of going out to direct lenders, or find a property you can pay all cash for.

Submitted by Jack on May 11, 2012 - 10:18am.

Have you checked out Aimloan? Their rates seem pretty consistent with absolutemortgage, but they have a calculator you can use to tailor to your situation (investment/non-investment property, condo, SF, etc) which then spits out different rate options and the rate/fees they would charge. I was thinking about using them for a possible purchase this year.

Have any pigs had experience with Aimloan or GoodMortgage (found this one on Mortgage Professor)?

Submitted by HLS on May 11, 2012 - 3:37pm.

Have you found a loan yet ??

You need to understand what loan approvals are based on and realize that nobody is a gift to a lender even though you think there is no risk to them.(There is)

Having a high credit score, large down payment and/or huge income doesn't get you a loan....
Qualifying by the guidelines is what gets you a loan.
If your "whatever that thing is" is too high, you aren't going to get a loan. Period.

THE SYSTEM IS BROKEN. Someone with 5% down can get a loan if their ratios are OK, but you may not be able to get one with 70% down if your ratios aren't OK.

THATS the system.
Designed and approved by genius idiots in govt that claim that they want to fix the housing 'mess'

Hard money lenders will give you a loan with 70% equity and not care about anything else, but you are probably looking at 10%-12% interest.

You have a slim chance of getting approved with a 60% ratio as most lenders will not accept this, but it may not be impossible.

Loan approvals are automated and the people you are talking to may all be using the same system.

Submitted by bearishgurl on May 11, 2012 - 3:56pm.

Thank you for your post, HLS. Not surprisingly, it seems like another one here is shopping properties that are "out of their league."

Submitted by poorgradstudent on May 11, 2012 - 4:08pm.

I'm confused, considering your 70% down payment should make you a great bet. Because if you walk, they get to keep the house, and your 70%... the market would have to crash a LOT for that not to be a good bet.

Submitted by HLS on May 11, 2012 - 4:15pm.

Not necessarily out of league, just not realizing:

1. A high credit score doesn't make it any easier to get a loan, it only determines the pricing.

2. Lots of equity doesn't make it any easier to get a loan, it only means the payment will be lower. (The lower payment will help you qualify, having lots of equity wont)

3. Having a million dollars in the bank (or assets) doesn't make it any easier to get a loan, in most cases you only need to document the cash needed to close the loan, and excess cash doesn't matter EXCEPT for rental properties reserves.

Loan approvals are based on valid/usable income VS. certain expenses.PERIOD.

Just a myth of people thinking they will have no problem getting a loan, but not having a clue what the guidelines are.

Absolutely ridiculous that 5% down can be an easier loan than 70% down BUT that's the system.

Sad, pathetic, unreasonable & stupid, BUT the way that it is.

Submitted by HLS on May 11, 2012 - 4:22pm.

poorgradstudent wrote:
I'm confused, considering your 70% down payment should make you a great bet. Because if you walk, they get to keep the house, and your 70%... the market would have to crash a LOT for that not to be a good bet.

YOU DONT UNDERSTAND THE SYSTEM.
Hard money lenders will take that chance at much higher rates.

There are many ways to fight foreclosure.
Not so easy to get a house back and there are plenty of expenses involved and crazy moratoriums etc.

Don't be confused, just accept that's how the system works. They are not in the business of foreclosing.

They ARE in the business of having clueless people overpay for houses with very small downpayments.

Do you understand that housing market is the greatest Ponzi scheme ever invented ?

Submitted by bzribee on October 23, 2012 - 1:41pm.

Eye opening comments--thank you!

Well, family emergencies occurred and I'm just getting back to these posts today. I did get loan approval and continue to look in North Park, primarily. I am actually looking at lower priced (than my loan amount) places because I hate to owe money and I don't need to overpay. The comments by HLS and others were really helpful. I get the message--I've overinflated my "I'm a great risk" scenario, and I've just got to suck up that this is the way it works. Got it!!! I disagree with the poster who said I'm looking for more than I can afford but that's okay--it's all food for thought. Meanwhile, I will check out some of the online loan sites, and continue to look around. I"m in a very low cost apt so I have time if I need it....Thank you, all!

Submitted by spdrun on October 23, 2012 - 2:58pm.

There are things in between government-guaranteed loans and hard money. Some banks (East-West, maybe Emigrant and Investor's if they operate on the West Coast) will give a manually-underwritten portfolio loan at a competitive (read: below hard money prices) rate if you come to them with 50%+ down. HSBC also does simplified loans through their Premier department, but that requires 100k+ cash in the bank.

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