Larry With Caption

Loan Qualifying Know How High You Can Go

Loan Qualifying: My first loan officer job was working for a major bank. I was thoroughly trained, on salary thank goodness, and then placed inside a large real estate office. Of course mortgage banks have standards for loan approvals. Generally you are working on income to house payment ratios and income to total debt payment ratios. There are other rules to deal with. When a loan officer tells you what you qualify for it is often a conservative number. Besides being safe on the commitment they have to be concerned what happens if interest rates rise while borrowers are out shopping.

No one wants a failure in a transaction because of a loan failure once in process.

Here is another consideration that I have found helpful. I have written that I consider that searching for a home us comparable to a treasure hunt. So what if the treasure is a little more expensive than originally budgeted or a little above the safe approval level?

When I was a loan officer I would respect both the borrowers budget wishes and the importance of being careful. However I had enough experience to take another step. I would tell my agent and usually the borrower to start looking at the low range of the qualifying. In addition I would figure an amount that I believed I could push them to. Often I would run it by an underwrite first to confirm the upper limits. With good credit, extra cash reserves, a higher down payment, or other factors the borrower can be stretched. My proposal is that they move up in price in $10,000 increments. That jump  often makes a big difference in what you get. Moving up in looking from lowest price to the upper limits often finds the treasure is in the higher range, even higher than originally considered.

After all it is a long term purchase, get the dream home folks.

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