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I think any Homepath house for sale will say (as little as 3% down) leaving the door open for a higher %. Don't forget you are dealing with a bank they do not care.
It's just strange to me how something can drastically change when it goes into underwriting as far as the borrower is concerned. I didn't overbid by very much, so it's not like the property is actually worth way less. And my financial state hasn't changed since I started this process. It just doesn't make sense.
Not the first time I've seen changes once the paperwork goes from the front desk to the underwriters. More experienced professionals tend to know what underwriting is looking for, assuming they have the time to spend on it. A simple credit score and some basic info doesn't cover it. The debt to income ratio is important nowadays (as it was before the boom cycle), and banks today just want more skin in the game.
One intangible that banks have overlooked forever, is the current cost of housing versus the costs after a purchase is made.
ie:if you're currently paying $1,000 a month for rent, paying $550 a month for your total housing costs after a purchase should make you a shoe-in. It doesn't.
The banks also rationalize that if 3% is the most you've saved, you might be a bigger risk if something happened. No cushion for you, and no cushion for them.
I thought the same thing regarding the credit score. Like I said, I'd have well over $10K even if you subtracted my debt, which entirely consists of student loan debt. I think it also has something to do with the bank wanting 10% since I bid over and they can't require an appraisal for the property. I sort of get that from a business perspective, but if that's the case, why not just say so? And why make me believe I'm getting 3% like most everyone does when they apply for a HomePath mortgage just to change because "the underwriter says so"? I get wanting to take smart risks and that sometimes means not giving people what they want, but how professional is it to be like "oh, well, sorry, now we need several thousand more dollars, even though we told you different last week"?
I don't think you are understanding the distinction between pre-approval and under-writing. Let me guess, the loan officer told you that you can do 3% correct? There are many cases when someone is pre-approval but that's not usually done by the underwriter.
No, I get there is a difference, but I'm saying when you get a pre-approval letter and a GFE for 3%, for it to shoot all the way up to 10% because it went into underwriting and nothing on my credit or finances or the property changes, that is a big deal. I would've been more prepared had I known that could happen than it just being sprung on me.
but I'm saying when you get a pre-approval letter and a GFE for 3%, for it to shoot all the way up to 10% because it went into underwriting and nothing on my credit or finances or the property changes, that is a big deal.
That is why its a pre-approval and not an approval. Its sort of like a good guess. In this case the guess was wrong.
That is why its a pre-approval and not an approval. Its sort of like a good guess. In this case the guess was wrong.
I think it's more that the lender wanted to hem me up since I was already under contract by making me pay 10%. Pre-approval is contingent on the borrower and the property; my circumstance changed because my file changed hands.
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