My husband has a 730 and we've heard every excuse in the book. We've been getting the runaround for months now.
His file should just clear automatic underwriting, but it never does.
Lesson I've learned: Never work with a mortgage broker. Yes, you could find a good one, but most are lying car salesman. Work directly with a lender that services the type of loan you are going for. We've made that mistake twice now, though this time the broker lied and said they were a direct lender. I also think the scummier the broker the more likely that none of their files make it through automatic underwriting. My husbands really should have gone right through, instead it got flagged, I'm thinking because of the broker who submitted it.
More than likely the lender she submitted it to just doesn't accept scores under 640 and she doesn't want to tell you that was the only reason. Some lenders have 640 as the cutoff, but will consider for a strong file otherwise. Sub 640 plus payment shock = denial.
We're now supposed to close end of April too.. I'll believe it when I see it.. lol
I'd never heard the term "Payment shock" before.
My guess is that some can get much better rates with a broker but the process may not always be smooth.
Starting Score: 675
I looked it up and "Payment shock" seems to refer to situations where your obligations increase by too much, e.g., 200%, or when interest rates change drastically with an ARM.
The theory makes sense but I don't know why the oh-so-sensitive "How are you gonna afford this?!" topic wouldn't come up sooner in discussions with a broker. I'd also argue that a good broker would work hard at matching borrowers to lenders suited to their situations and also let people know that credit scores are the only the beginning. House buying is a very emotional process and brokers would likely lose too much in commissions if they were the ones saying no instead of banks. 
I remember speaking with USAA on this. They basically have a formula and don't want to help people become "house poor". They use scores but DTI, student loans, expenses, income, etc... are factored in as well.
@Anonymous wrote:U r correct about payment shock. They were going to deny the loan because I would be paying more than double what I pay in rent. The philosophy is that since I have not been accustomed to paying so much per month, I may stop paying.
When I did the research on payment shock, I only found the term used for homebuyers who were underwater on their mortgage due to ARM and balloon payments that sent them into foreclosure. I can't believe banks are now trying to use individual homeowner scenarios with new home buyers who are not in an ARM, balloon payment or underwater loan. I would argue that payment shock will not apply with a 30 yr fixed mortgage at 4.25%.
Aside from doubling the monthly payment, there's all the costs associated with home ownership to consider. Even at 0%, doubling a monthly expense would give many people, already struggling with their cash/credit, difficulty.
Hope things work out!
