I got pre-approved for $235K, but when I asked for another pre-approval to another lender they said they can only pre-approved me for only $165K..???

Asked by Mik Rodriguez, Tamiment, PA Fri Dec 2, 2011

I really like a short sale property and I already put an offer on it.... with my first pre-approval letter I got, but now im a little concern that for any strange reason I wont get the actual loan at the very last minute? This will be my first home and since its a short sale I really dont mind waiting for the bank to accept my offer, I have the 3.5% downpayment (FHA) and Ive been at my job for 10 years, my debt its only 200 per month and Im making 53,300 per year plus maybe another 3000 doing extra freelance here and there, the taxes for the property I loved are 8k, I can definitely afford the payments per month (2K-I even have a roomate) with the PMI,insurance and all that, I just need somehow to make sure I will be able to get the actual loan from any trusted lender. THOUGHTS????

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14
, ,
Sat Dec 3, 2011
Hi Chris and thank you for acknowledging my answers as I try to help as many people as possible. In regards to your question I will let you know upfront that I leave credit to the experts. I have had this question come up a million times before and I always go back to an article that Dave Wheeler, a Credit Expert from the company Credit Plus Inc. referred me to and here is what it says- I will also send this conversation to Dave and ask him to respond here so that we can get the best and most up to date answers regarding credit. I hope this helps and I am always here to help!

A search for new credit can mean greater credit risk. This is why the FICO score counts inquiries - requests a lender makes for your credit report or score when you apply for credit. FICO scores consider inquiries very carefully as not all inquiries are related to credit risk. There are three important facts about inquiries to note:

Inquiries usually have a small impact. For most people, one additional credit inquiry will take less than five points off their FICO score. However, inquiries can have a greater impact if you have few accounts or a short credit history. Large numbers of inquiries also means greater risk: people with six inquiries or more on their credit reports can be up to eight times more likely to declare bankruptcy than people with no inquiries on their report.

Many kinds of inquires are ignored completely. Your FICO score does not count an inquiry when you order your credit report and score from a credit reporting agency or from our site, http://www.myfico.com. Also, the FICO score does not count inquiries a lender has made for your credit report or score in order to make you a "pre-approved" credit offer, or to review your account with them, even though you may see these inquiries on your credit report. Inquiries that are marked as coming from employers are not counted either.

The score allows for "rate shopping". If you're looking for a student loan, mortgage or an auto loan, you may want to check with several lenders to find the best rate. This can cause multiple lenders to request your credit report, even though you're only looking for one loan. To compensate for this, FICO scores distinguish between a search for a single loan and a search for many new credit lines, in part by the length of time over which inquiries occur. When you need an auto or home loan, you can avoid lowering your FICO score by doing your rate shopping within a short period of time, such as 14 days.


Jeff Onofrio
Branch Manager / Director of Renovation Lending
Licensed Mortgage Originator
AnnieMac Home Mortgage
jonofrio@annie-mac.com
mobile 609-217-9409
http://jeffonofrio.annie-mac.com/
3 votes
, ,
Sat Dec 3, 2011
Sorry Chris- I forgot your other question. If as lenders we are to give you a true pre-approval then we need our own credit report- using a free report or another lenders doesn't help us to give you a true answer.

Do research on the lenders you are considering and know whom you are working with. If you Google my name you will see me all over the place with only good testimonials. This is an easy step that any customer can try. Also after you interview your lender as for references. Any lender worth anything can offer you many references from clients and Realtors alike.

I hope that this helps!!

Jeff Onofrio
Branch Manager / Director of Renovation Lending
Licensed Mortgage Originator
AnnieMac Home Mortgage
jonofrio@annie-mac.com
mobile 609-217-9409
http://jeffonofrio.annie-mac.com/
2 votes
, ,
Sat Dec 3, 2011
Hi MIK Rodriguez:
Its important to realize that getting a pre-approval isn't a standardized calculation. Some lenders will allow you to go to higher debt to income ratios which in turn determines the amount of loan you can qualify for. The first thing I would ask is with the lenders you spoke with- did they determine your qualification based upon credit and what you told them your income was or did they require you to submit income docs?

The reason I ask this is that many lenders still pre-approve clients by pulling credit and just going off what the client tells them there income is. I try to go a step above that because it is truly important to understand you and to get the "full picture". If you were working with me I would have asked for full tax returns for the last two years and 30 days most recent pay stubs- in turn I would have gotten an underwriter to tell me the exact income she would use.

2 reasons we can and do- do this all the time. 1st- is we are a direct lender and I have underwriters who sit within 10 feet of me- these are ultimately whom is either going to approve your loan or deny it- so why not get that information for you upfront. 2nd- most pre-approvals are not worth the paper they are written on. We want to get you approved- so lets get it right upfront.

My suggestion is to get other opinions- there are plenty of good lenders in NJ and I am also available (and in NJ) to help. Good luck

BTW- the freelance work is why we would want to see tax returns- having side income is fine but not all underwriters will interpret it the same way especially if it is "here and there". Income must be consistent in order to be used for qualifying. Important to understand that as most borrowers do not and usually it is because there loan officer has not explained that to them.

Have a great weekend.

Jeff Onofrio
Branch Manager / Director of Renovation Lending
Licensed Mortgage Originator
AnnieMac Home Mortgage
jonofrio@annie-mac.com
mobile 609-217-9409
http://jeffonofrio.annie-mac.com/
2 votes
Annette Levi…, , New York, NY
Mon Dec 5, 2011
MlK,
Were any of the preapprovals underwritten? If not then they are worthless. You can have 6 inquiries from mortgage banks (brokers or lenders) within 45 days without an effect on your FICO scores. For a true preapproval, you need to supply the following
permission to run your credit
2 years tax returns
last month's worth of pay stubs
2 months bank statements on all your accounts (including retirement)
If you did not supply this information for the preapproval, then you need to go to anther lender.
1 vote
Chris Gubb, Agent, Ridgewood, NJ
Sat Dec 3, 2011
Hah Well there we go!
Sounds like a great match!!
Good Luck,
Chris Gubb
1 vote
Chris Gubb, Agent, Ridgewood, NJ
Sat Dec 3, 2011
Agreed!
Great job Jeff!!
I actually learned a few facts myself and some good approaches to advise my clients
1 vote
Mary Petti, Agent, Edison, NJ
Sat Dec 3, 2011
MIK,

Jeff's answer was the best and most informative...I also agree that your should have provided documents to prove your income, etc. Its a more detailed way of making sure you qualify for the loan you are looking for especially if your income fluctuates because of freelance work..

I WOULD ask both lenders why and how they qualified you for such a drastic difference in purchasing power and use Jeff''s explanation as a guide. Some lenders will tell you just what you want to hear and not what you need to hear. .

I understand that you are willing to wait for the short sale. However going with the first lender just because they qualified you for more money now, doesn't guarantee that you will get final loan approval. Why would you want to wait 3-4 months for the short sale approval, only to find out that you can't get the loan at the end?
1 vote
Marsha Bowen…, Agent, Livingston, NJ
Sat Dec 3, 2011
Jeff, you provided some great information in regards to the credit inquiries. Many buyers, including myself are reluctant to shop around for a mortgage because of the negative effect it can have on your credit. This is the reason most buyers are willing to go along with the first mortgage company that gives them a pre-approval.
I was actually hoping a mortgage broker would chime in with helpful information to assist Mr. Rodriguez and you did.

Thank you,
0 votes
, ,
Sat Dec 3, 2011
Thank you! I tried emailing you but it got kicked back. Please send me an email at your earliest convenience or call my mobile and I will help you in any way possible! Look forward to helpin you!

Jeff Onofrio
Jonofrio@annie-mac.com
Mobile 609-217-9409
0 votes
Mik Rodriguez, Renter, Tamiment, PA
Sat Dec 3, 2011
Hi Jeff,

I like your answers here... Will you please contact me directly @my email? Info@mikcreativestudios.com

Thx
0 votes
, ,
Sat Dec 3, 2011
I estimate 30 % of the preapproved buyers in my market do not qualify for the loan they think they are approved for because they never furnished copies of their support documents during the pre-contract stage. While the credit report is important it is only a piece of the application, the rest is just as important. I blame the loan officer for issuing a preapproval letter without reviewing support documents and the borrower for not taking the time to provide them to the LO. Have your Realtor introduce you to the loan officer they trust the most. Gather all of the support documents that will be needed to apply for a loan and meet with the LO face-to-face, have them walk you through the process and options available. If you are not working closely with a Realtor that is the beginning of the problem. Do not make take any more actions before finding a good Realtor to help you through the process, as you have already learned it is a lot more complicated than anyone has shared.

Sorry about the predicament it puts you in, I hope others that may read this will not fall into the same trap. Good luck,
0 votes
Chris Gubb, Agent, Ridgewood, NJ
Sat Dec 3, 2011
Now I have a question for you Jeff...this does pertain to you MIK.

I know IF there are too many credit report requests from various lenders this can affect the individuals credit score.
Does the client get their own report then submit to potenial lenders to avoid numerous inquiries while they are shopping rates?
What's the real story here?
Thanks,
Chris Gubb
Keller Williams
Ridgewood, NJ
0 votes
Marsha Bowen…, Agent, Livingston, NJ
Fri Dec 2, 2011
Congratulations on being a first time home buyer. If I were you, I would stick with the 1st lender's preapproval. You only need one lender to approve you for a mortgage. Just make sure you discuss your qualification in detail to assure you qualify for a FHA mortgage.

Good luck!
0 votes
Chris Gubb, Agent, Ridgewood, NJ
Fri Dec 2, 2011
Oh how confusing for you.
Without asking you what institutions gave you these conflicting figures, please consider the source. Are they from banks or mortgage brokers? Sounds like you need to shop around more to see what the 3rd and 4th pre-qual brings.
I am an agent so I am definitely not an expert here but it sounds like you've really mapped out a nice budget plan.
Perhaps some lenders will respond to your inquiry.
If you go to the "find a Pro" tab on Trulia and click Mortgae Brokers/lenders in the drop down you can review individual profile.

Best of Luck,
Chis Gubb
Keller Williams
0 votes
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