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Got approved for my first mortgage. Not happy with the numbers

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Anonymous
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Got approved for my first mortgage. Not happy with the numbers

I just got pre approved with HSBC for my first mortgage under the community works that HSBC does. I signed up for first time home club where I put money in a savings account and they match up $7,500. I was pre approved for a sale price of $170,000 and loan amount of $154,000. My income is now $60,000 a year I took a paycut for a new job but it has way better benefits (health insurance, pension etc). I have $16k in my savings account.
My credit utilization is at 18 percent. I have a car payment of $442 and student loan payment of $136. I guess you can say $200 in credit card payments a month with the minimum payments.
I was expecting a higher amount around the 200k amount. Trying to find something for 170k is going to be hard in New York. Im trying to get more info from my loan officer as to why this amount but she takes forever to respond. She is not very informative.
I wanted to know what you guys think. Do you think I can do better with another bank. I really don’t understand this debt to income ratio thing.
10 REPLIES 10
pgtackle2003
Frequent Contributor

Re: Got approved for my first mortgage. Not happy with the numbers

There are a lot of mortgate calculators (How can I afford) online. If you do a quick search you will find a lot of them. The price she's telling you seems to about right from what I can calculate based on your situation. So it seems like you will need more of a down payment or a bit more income. I know you mentioned you just switched jobs so this is unlikely

Message 2 of 11
JVille
Valued Contributor

Re: Got approved for my first mortgage. Not happy with the numbers

Switching jobs may have been wise for you in the long run but doing it during the Lending Process is never a good idea.
Message 3 of 11
Anonymous
Not applicable

Re: Got approved for my first mortgage. Not happy with the numbers

What kind of debt are you carrying behind those $200/month minimum credit card payments? This could play into your situation as well. There is a good possibility this alone is keeping you from your goal approval amount.
Message 4 of 11
iced
Valued Contributor

Re: Got approved for my first mortgage. Not happy with the numbers

Being approved for $154,000 on a $60k income actually sounds about right for the high end. My first mortgage almost 15 years ago was for $160,000; back then I made around $60k and it was a struggle.

Message 5 of 11
Anonymous
Not applicable

Re: Got approved for my first mortgage. Not happy with the numbers

Familiarize yourself with how debt to income works. 

 

You’re are either going to have to increase your income, save more down payment, reduce your other debt, or buy “less house”

Message 6 of 11
Anonymous
Not applicable

Re: Got approved for my first mortgage. Not happy with the numbers

Thanks for all the replies! My loan officer got back to me I copied and pasted the conversation. I forgot to mention that me and fiancée are moving together. The issue she has tons of student debt over $200k in loans but it will be written off in 7yrs due to her profession. So that’s why we decided to do this program with just my income cause the Max was $90k for a single person. Both of our incomes would knock us out of the program.

Here are the answers to your questions please confirm receipt and review.

1) Were there any red flags as far as my credit report is concerned or my debt to income ratio? Did these affect to total amount I was approved for?
The credit is fine they will only need a letter of explanation for the old charge off accounts which are paid in full. Your ratios are 22/44 and yes this is the max you can be approved for.

2) If some extra debt was paid down would there be a possibility of being approved for more?
We can only take into consideration if you pay down installment loans to less than 10 payments, not revolving debt

3) I see this mortgage will be with the Community Works program. I’m not familiar with program, would you be able to explain more about this program? I thought I was under the First Time Home. Is there a big difference between the two?
Yes Community Works is a mortgage product we can use for first time homebuyers which offers up to $7,000 towards the closing cost which is in ADDITION to the homeclub grant.

4) I see the loan amount is for $156,000 and the sale price is for $170,000. Are any grants taking care of the $14,000 difference or is my down payment with a combination of grants?
You will need to put 3% of your own funds into the transaction and the grants will be used to support the difference as well as closing cost.
Message 7 of 11
pgtackle2003
Frequent Contributor

Re: Got approved for my first mortgage. Not happy with the numbers

The fact she says your revolving debt being lower won’t help makes no sense. Revolving debt absolutely counts towards DTI so I find this very odd. I’d certainly be seeking another lender/broker if I were you.
Message 8 of 11
Anonymous
Not applicable

Re: Got approved for my first mortgage. Not happy with the numbers

I was thinking that myself. I got a check today for 3k from my old job and I can use that to pay off my some credit cards. These are the cards I have that have balances. The rest or my cards have a 0 balance.
JetBlue Plus 1086.23/3,600
Care Credit 1646/15,000
Amazon Store Card 1049/6,000
Citi Costco 3818/6,700
Message 9 of 11
Mortgage-Specialist
Established Contributor

Re: Got approved for my first mortgage. Not happy with the numbers

Your debt ratio is only 44%?? Your lender appears to be like the majority of strict ones out there (but worse) Instead of them.following Fannie Mae, Freddie Mac or FHA guidelines, they make up their own.

Its amazing to how ridiculous some of these lenders are. Unless you dont need the money, you might want consider keeping your 3k and call a different lender. If youre going conventional, the allowable dedt ratio is 50% If its FHA, it can go up to 56.9% which happens all the time. (Mod cut-This is considered solicitation and is prohibited on this board, thank you for your understanding)

Message 10 of 11
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