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Hello,
I applied for a mortgage with my wife last week and received a "fees worksheet" back. The mortgage guy said we were pre-approved for 200k FHA loan but it's not the maximum amount. We were told that we need to figure out what monthly payment we were comfortable with, then we could determine a price point. We were told that the interest rate is not set in stone. Also was told that we can only lock your interest rate in once you have a contract on a home with a defined sales price and closing date. Is this correct? If so, what is the point of the fees worksheet and the hard inquiry on our credit? Any help would be greatly appreciated.
PS I attached the fees worksheet we received. Any input on that would be be helpful. Thanks!
It does seem a bit odd they wouldnt tell you your max preapproval. Are you looking to borrow more than 200k?
I do agree with your lender. You should determine how much you can afford to pay per month, and make sure to include property taxes and insurance in that ammount. That will let you know about how much you can afford.
The fees worksheet and the credit inquiry is to get your preapproval and give you a rough idea what everything costs. That way get an idea where you stand, and once you buy a house they can give you the good faith estimate and lock in your rate
I think your lender is being honest with you. The "Fees Worksheet" is just an estimate to let you know what the costs will be and how much cash you will need. With regard to the maximum purchase amount, the loan officer is likely looking at your DTI and thinking that this amount would meet their guidelines for approval. He is probably leaving a "fudge factor" in case you see a house that is a little higher priced. Keep in mind there could be changes in interest rates, fees (depending on the loan program), PMI, etc. that could affect your payment.
In order to give you an accurate GFE, he will have to know the exact terms of your agreement (contract). Locking interest rates before you even know how much you are borrowing is unrealistic. Also most banks will not lock interest rates for extended periods of time (20+ days) without additional charges.
Of course, you are welcome to shop around with other lenders to see if you can get a better deal. Unless your credit scores are marginal I would not be concerned about the credit inquiries.
I would be more worried about a loan officer that is pushing you to borrow more than you are comfortable with than one who is being conservative.
Hello,
I applied for a mortgage with my wife last week and received a "fees worksheet" back. The mortgage guy said we were pre-approved for 200k FHA loan but it's not the maximum amount. We were told that we need to figure out what monthly payment we were comfortable with, then we could determine a price point. We were told that the interest rate is not set in stone. Also was told that we can only lock your interest rate in once you have a contract on a home with a defined sales price and closing date. Is this correct? If so, what is the point of the fees worksheet and the hard inquiry on our credit? Any help would be greatly appreciated.
PS I attached the fees worksheet we received. Any input on that would be be helpful. Thanks!
Everything they said is true, and the taxes and insurance even look accurate. The credit pull is the first step in pre-qualification. That, and examination of your income, result in pre-approval, which is required to go to contract, which then opens up the door to specific fees calculation and a Rate Lock.
May I suggest that you look for another broker who will help you understand this stuff properly? It's complicated and important stuff. It's the biggest investment and biggest debt you're likely to incur in your lifetime.
First time buyers need to find a realtor and a mortgage broker who will hold their hand through the process. Don't hesitate to ask for that help.
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