Best strategies to get a higher pre-approval?

Asked by bonbon, Edgewater, MD Tue Jan 8, 2008

I have good credit, stable job, and solid income. Recently, I contacted my credit union to get a pre-qualification. They pre-qualified me for an amount that is 15-20% lower than what I'd like or need. I believe I could afford paying that higher amount. I know I could do some things on my part to reduce my monthly commitments (reduce car payment etc.). What else could I do to 'convince' the lender to approve a higher amount? Do the lenders usually pre-qualify the borrowers for the highest possible amount or do they start conservatively? Any advice or suggestion is very appreciated. Thank you!

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5
Tman, , 30642
Wed Jan 9, 2008
BEST ANSWER
Here's some food for thought ....

When you purchase a home there's a few little monthly bills that most current buyers have kinda forgot about.

You have property taxes and depending on the what and where, it can and does increase you monthly payment by $200/$400 a month.

You now have things like homeowners and maybe flood insurance, that can easily run your payment another $150/$200 a month depending on the area.

Minor things like water bills, depending on the area (and if you have kids) it might cost $50/$75 more a month.

Buyers forget about the simplest things like the electric/gas bill .. again, depending on the area and the time of year you might easily be seeing $250 a month just on budget billing.

Of course we all have to have cable, we can't miss the Sopranos, right.? .. before you blink you can be reading a $150 cable bill a month.

Phone is always the "sleeper", thats because folks are using cell phones and they forget that extra $100 a month.


Hey before you know it, there's at least another $900 floating along with that monthly mortgage payment....

Most times, it's best to be low in debt and high on life....


Good luck.!
2 votes
Susan, Home Buyer, San Francisco, CA
Tue Jan 8, 2008
My experience is they try to get you to borrow as much as possible...beyond your means in the bay area. Bank of America will foolishly loan a person up to a 60% debt to income ratio. You should really try to keep the ratio below 40%.
2 votes
SueAnne Hart…, , Sheboygan County, WI
Wed Jan 9, 2008
Actually, it is best to be conservative. A couple of years ago few lenders were approving buyers WAY beyond their means. What happened? Buyers really could not afford the home. Than what? Foreclosure. How about putting a higher down payment to make up for the difference in what you are borrowing. Have you considered FHA? Talk to a couple of lenders to get different viewpoints. Just remember, things change. Income, family size, expenses. Your lender should look out for your best interest to allow for these changes to occur without you being put into the "doghouse". If ever you need more advise, you have come to the right place.
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1 vote
Jim Welden, Agent,
Tue Jan 8, 2008
Bonbon - great question - my experience is similar to Susan's - lenders tend to pre-approve you for the largest amount they are comfortable lending you. What can you do to increase the amount? Eliminate as much of your monthly debt as possible - pay off all loans - increase your income. Have you visited with the loan officer you have been working with to gain their insight to this question? I am sure they would love to earn your mortgage business and they will share why they have pre-approved you for the amount they did and what they think you need to do to increase the amount.

Another lender may look at your file differently so it may be worthwhile to visit with someone else but if you spend any time on this site, it seems that every 5th question has to do with short sales and that is partly because lenders became very relaxed about their credit guidelines - presumably you do not want to become another of the casualties.

There is nothing I enjoy more than helping a Buyer acquire the home of their dreams but each time I also hope the Buyer never has to call me and say "we need to sell and downsize - we bought too much home - our life is house rich and life poor"! I wish you well in your search.
1 vote
bonbon, Home Owner, Edgewater, MD
Wed Jan 9, 2008
Thank you, all! These are the type of advices we expect from the experts.
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