Question about getting Prre-approved

Anonymous · ‎12-28-2007

In about 14 months, I will be ready to buy my first home. I have been looking at houses online in my potential neighborhood.

I understand it's good practice to get pre-approved, and when I do so, to ask for a specific amount. Here's the question-- Let's say I find a house that is actually $15 grand less than my target price. Then, after closing, I'll have this excessive cash on hand. Of course I could pay down principal within the first year, but I'd rather just have a lower payment.

Is this common? Can I then go back to the bank and tell them I want to borrow less with the same terms?

Anonymous · ‎12-29-2007

FATDUMBHAPPY wrote:
In about 14 months, I will be ready to buy my first home. I have been looking at houses online in my potential neighborhood.

I understand it's good practice to get pre-approved, and when I do so, to ask for a specific amount. Here's the question-- Let's say I find a house that is actually $15 grand less than my target price. Then, after closing, I'll have this excessive cash on hand. Of course I could pay down principal within the first year, but I'd rather just have a lower payment.

Is this common? Can I then go back to the bank and tell them I want to borrow less with the same terms?

It doesn't work that way. When your preapproved they will give you a said amount that they would be willing to let you borrow but they dont give you a check for said amount and tell you to go shopping for the home. You would still need to qualiy for a loan of the preapproval. When you find a house you will be required to tell them the price of it and your mortgage loan will be based on that not what you were pre approved for.

If you want some extra cash after closing, you would have to talk to the seller and asked them to sell the house for more than their asking. You then run the risk of the appraiser saying it's not worth the extra $ they are looking for.

Anonymous · ‎12-31-2007

what steelfan has said isnot going to fly - The lender would never go for it even if the house appraised. And not putting it on the HUD gets everyone a possible jail sentence - you getting a few thousand isn't worth it to me...

The lender would never allow the selller to 'pay' your downpayment directly.They want you to have money in the house to mitigate their risk even on an FHA.

The last time I had a buyer get cash back at settlement was on a 0%-down VA loan --- $1000 good faith deposit, $688 back at the table (bought the house for $322 out-of-pocket). DH and I got much more at the table - again a VA loan, 4% closing cost help - BUT DH does not have to pay property taxes (seller and their agent didn't know this when I negotiated the deal and I didn't have to tell them) - so we walked with about $3K of the seller's money after refunding them their pre-paid taxes, paying all of our costs, etc). They were really mad (do you think I care?). It can happen but only under special circumstances.

If you want cash for fix-up look into FHA 203(k) - it is a legit rehab loan for the property. If you need downpayment help there are grants, AmeriDream, Neamiah etc - and also closing help programs. FHA allows your downpayment to be a gift from family.

Message Edited by Lady_Scarlet on 12-31-2007 02:10 PM

Anonymous · ‎01-01-2008

Ok, I really didn't get the information I was looking for here. Perhaps I was not clear on my concern. Anyway, I talked to a guy at work and my question was answered.

I'll get pre-approved for an amount UP TO xxx dollars. Therefore, if I buy the less expensive home, I won't have to jump through additional hoops to satisfy my needs.

My buddy mentioned he received a check for $5000 shortly after closing. He wasn't sure of the details, but was happy to have the money for some immediate needs. Myself, I'm not looking for that.

Anonymous · ‎01-01-2008

Lady how come DH did not have to pay taxes?

How does the refunding of taxes work?

Anonymous · ‎01-01-2008

Maryland has a nice perk for disabled vets and surviving spouses

(from the SDAT site)

Disabled Veterans and Surviving Spouses: Armed Services veterans with a permanent service connected disability rated 100% by the Veterans Administration may receive a complete exemption from real property taxes on the dwelling house and surrounding yard. These veterans also may apply at any time and do not have to meet the September 1 filing deadline. Unremarried surviving spouses also may apply for this exemption. Surviving spouses of military personnel killed in the line of duty may apply for an exemption.

missgamecock · ‎01-02-2008

We walked away with $1200 at closing with our first mortgage. It was a 0% down and all closing costs financed in (some special farm loan program through rural housing. You had to meet income limits. We barely sqeaked through. We would never meet the income limits now!). Our house appraised out. We had only put $300 down as earnest money. We paid for a home inspection as well $200. The home inspection refunded all money to us because the inspector completely missed an obvious illegal gas line to the dryer. The previous homeowners had jimmy rigged a propane line to a natural gas line. When we had our new gas dryer delivered the company said it was an illegal line and could not be connected. Had a plumber come out and replace the line. He said the same thing and that the home inspector should have easily caught that. So I raised he!! with the inspection company and they refunded our money. I was so mad. The inspector was a jerk, not anything like the previous inspector who had inspected another house we almost bought. Dh is a veteran too but has a 10% service connected disability. We qualified for lower taxes. No we didn't say a word to the sellers about it. In all we got about $1500 from closing.

We refinanced the house in November for a lower rate and walked away with paying off a $10,000 home improvement loan, a credit card and $3000 cash back.

Message Edited by missgamecock on 01-02-2008 04:32 AM

Anonymous · ‎01-02-2008

When you buy a home how do they normally do the taxes? Does the previous owner pay the amount of taxes for the time during the year that they lived there and then the new owner the rest?

ShanetheMortgageMan · ‎01-02-2008

thomasil74 wrote:
When you buy a home how do they normally do the taxes? Does the previous owner pay the amount of taxes for the time during the year that they lived there and then the new owner the rest?

Exactly, they are pro-rated for the amount of time that each person owns the home for. So if taxes are due 2/1/08 for the months of 8/1/07 to 2/1/08, and you closed on the home on 1/1/08... you'd get a 5 month tax credit from the seller at closing, and you'd be responsible for paying the full 6 month amount on 2/1/08 (1 month you lived there for, and 5 months the seller lived there for... which would be counterbalanced by the 5 month tax credit you got from the seller at closing).

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Anonymous · ‎01-02-2008

Shane, Thanks for the info.

So in Lady's case she got a tax refund check from the seller but she kept it since she does not pay taxes (nice perk for disabled vets and surviving spouses).

How do they know what the taxes are going to be? Do they use the taxes paid by the seller in the previous year.