Burst my Bubble and help with best course of action

[Katheryne88]

We found a house... We were about to go the FHA route but the house is a Fannie Mae, on the 20 day first viewing period. So our realtor said we should get a prequal letter and submit an offer.

I did the online process with Amerisave, the officer Called me and told me our DTI was 49% but we have a LOT of cash in reserves and we should pay our car off (~$2000 left on it) because that's $400 off of our monthly income.

But we had planned on paying off our Amex which is the only credit card with a high balance on (~$6000) from all the cards we used to pay for our wedding. Minimum payments on that cards are ($180 month) so he said that doesn't take much out of our DTI.

He sent me a prequal letter and on the letter it states that we are paying the car off before closing, which I'm ok with, then he said with the letter we are good to make an offer. Is it that simple?
Looks too good to be true!!!

[ShanetheMortgageMan]

It's not terribly difficult to qualify for FHA.  With a 620+ score a debt to income ratio up to 56.99% can qualify, so if your mortgage scores are above that level then there is a pretty good chance the prequal letter will hold water as long as your loan officer has reviewed all of your paperwork and is confident in their ability to analyze it.  If you haven't sent any of your paperwork to the loan officer then do that ASAP, as there are more and more of these online "FastQual" lenders just sending prequal letters out without doing more than going through a loan application and checking credit.

[Katheryne88]

Scores weren't the issue (above 650)

The DTI was, as we used almost all of our CCs to pay for our wedding, and have slowly been paying them off. I also linked our accounts to prove funds on their website, already submitted pay stubs and the last W2.
The also asked for an explanation of almost every single inquiry we've had in the past 12 months..

Overall we don't think we'd be hard to aprove, I'm just a little skeptical because AmeriSave seems to be like QL with a 100 bad reviews for every good one, and it sure makes me wonder if the good reviews are even real. Also the fact that we aren't dealing with someone face to face is a bit scary.

My cousin told me I can take my prequal letter and bring it around at credit union and small banks to see wholl give me a better rate, rate at AmeriSave is at 3.25% but not locked yet.

Which made me wonder if it's really possible to change lender during the process and up until when I can do that (???)

[ShanetheMortgageMan]

At the time your offer is accepted you'll want to have your lender picked out.  The process to purchase a home is 30+ days at that point, but it still doesn't give you any extra time because title work, appraisals, etc. can take awhile and eat up most of the time you'll have. AmeriSave, Quicken, etc. don't do full reviews before you are pre-approved, so unless you have a squeaky clean file, you'll be asked for a bunch of information about half way through (after everything is sent to an underwriter for the full review) and if you have everything they need, it'll be fairly quick and painless process, but if the items they are asking for are going to take you awhile to get then that is when there are issues since you don't have much time left to close so you start to feel stressed, etc.  It takes Fannie Mae several days to a week+ to review and determine if they'll accept your offer, so you should take this time to really nail down the lender you want to use and proceed with.