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Pre-Approval with condition question

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kleahc
New Contributor

Pre-Approval with condition question

Hello! I have just gotten my pre-approval back for my mortgage, and I have two questions: (1) one of the conditions is concerning me, and (2) a loan application posted after the initial pre-approval/

 

(1) We are selling our current home, and using the proceeds for our down payment. The condition on the pre-approval states: "CD on sale of [current home address] netting $91,000"

 

My issue is, that would be the net after paying off the current mortgage ONLY IF we are able to sell for the full asking price (which just never happens!)

 

If we have to sell for slightly less than the initial asking price, will our mortgage for our new home be denied??

 

(2) My credit card utilization was pretty high (we were doing a lot of work on the current home to get it ready to sell) and so I took out a personal installment loan to pay those cards off quickly. However, the process took longer than I thought it would and the loan had not hit my credit report by the time the pre-approval went through. Is that showing up on my credit report at closing going to sink my loan?

 

Thank you!!

Message 1 of 3
2 REPLIES 2
kc0039
Established Contributor

Re: Pre-Approval with condition question


@kleahc wrote:

Hello! I have just gotten my pre-approval back for my mortgage, and I have two questions: (1) one of the conditions is concerning me, and (2) a loan application posted after the initial pre-approval/

 

(1) We are selling our current home, and using the proceeds for our down payment. The condition on the pre-approval states: "CD on sale of [current home address] netting $91,000"

 

My issue is, that would be the net after paying off the current mortgage ONLY IF we are able to sell for the full asking price (which just never happens!)

 

If we have to sell for slightly less than the initial asking price, will our mortgage for our new home be denied??

 

(2) My credit card utilization was pretty high (we were doing a lot of work on the current home to get it ready to sell) and so I took out a personal installment loan to pay those cards off quickly. However, the process took longer than I thought it would and the loan had not hit my credit report by the time the pre-approval went through. Is that showing up on my credit report at closing going to sink my loan?

 

Thank you!!


1. Do you have other liquid assets to cover this? If not, tell your loan officer. You can always buy a house and have PMI if net proceeds are less than $91,000

 

2. That may sink your loan because it can affect your debt to income ratio. Provide the paperwork for the installment loan, show the money hitting your bank account, then show the money going out of your bank account to pay for the credit cards. Show all the current statements for the credit cards to show a 0 balance. This is where your loan officer can play with the numbers and tell you what can work and what will not work.

Licensed in IL
Message 2 of 3
me12345
Frequent Contributor

Re: Pre-Approval with condition question

You need to ask your LO these questions...

 

They are the only ones who have enough of the details of your situation to provide you with what options are available to you.

 

....and be sure and tell them that you have more debt that will show up on your credit report later.

 

That way there will be no issues before Close of Escrow.

 

Thanks,

VA & FHA down to 550...
Licensed Senior Mortgage Loan Officer in the states of Arizona & California
Specializing in VA, FHA, USDA & Conventional loans. My company is also licensed in 12 states, Arizona, Colorado, Nevada, California, Oregon, Washington, Utah,
Alaska, New Mexico, Texas, Illinois and Florida
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