Mortgage pre qualification..

**mama2James** · 12-31-2008, 06:24 PM

My husband and I were approved for a mortgage today through a lender that specializes in VA guaranteed loans. When she told me how much we could be qualified to borrow I just about fell out of my chair. She said the upper limit we could borrow is $275,000! I almost had to laugh because there is no way we would ever dream of buying a house that expensive. The price range of the homes we have been looking at tops out at about 125 thousand.
We gave her an estimate of our income, since we will be relocating and starting new employment before we buy... I estimated my DH's potential income on the low end...so the total monthly gross that I gave her was just over $5,300 per month. We do have an auto loan and a line of credit that we are paying on as well. How on earth do they figure that we can buy a $275,000 house?!

**ladykemma2** · 12-31-2008, 06:28 PM

base it on one salary only.

they pulled the same stunt on us.

**mama2James** · 12-31-2008, 06:58 PM

Originally Posted by ladykemma2

base it on one salary only.

they pulled the same stunt on us.

We know there is no way we'd buy in that kind of a price range, so I had her send me the payment information and calculations based on a 125,000 loan.

I wonder how many people assume they can afford as much house as the bank tells them and get themselves into trouble. Maybe that's what the mortgage crisis is all about, huh?

**homesteadmamma** · 12-31-2008, 07:19 PM

I wonder if that's why so many people have lost their homes. I'm glad you guys are wise enough to know you couldn't buy a home in that price range. Good for you.

**Laura2** · 12-31-2008, 07:33 PM

That's great that you know how much you will be able to afford. That is the most important thing. Many people automatically buy according to what their lender determines they can afford without really thinking about how that payment will impact their lives.

**annertak** · 12-31-2008, 11:35 PM

I know a lot of people who bought homes or refinanced existing homes over the last few years, and their mortgages are in the $2000 range. I don't know how they do it! I know we make a pretty good income, but I couldn't afford that and expect to eat, too!

**jamie79** · 01-01-2009, 11:14 AM

They do that with the VA loans too because it is a guarenteed loan. Even if you were to default on the loan the bank or mortgage lender would still get their money from the government; Good for you for knowing what you can handle

**MomToTwoBoys** · 01-01-2009, 12:30 PM

They used both DH and mine's income in May 2005 to judge how much we could spend on a house and came up with $149k or something like that. We make about $2500 a month at that point and that would have been for a 25 year loan. We decided to go with something we could afford and as such, we pay only $670 per month on a $120k mortgage. That was even after putting $14k down for a down payment.

I don't think the woman who did your prequalification really cared how much you made and all because even if you foreclose, they still get their money from the government.

**pat in east texas** · 01-01-2009, 02:07 PM

When DH and I bought houses, one in 1961 and one in 1968 we had to have 10% down and the monthly payment amount could not exceed 1/3 of only his income. My income was not figured in at all. And the company that held the mortgage didn't sell the mortgage. We had no trouble making the monthly payments; indeed we paid the last house off 'way early. I don't know how people with payments that add up to nearly all their income do it!

**Wendy99** · 01-01-2009, 02:45 PM

Good for you. Lenders will do what benefits them, you do what benefits you & it sounds like you are doing just that!! Good Job.

**Grayce** · 01-01-2009, 09:04 PM

When we got our last mortgage the bank was willing to lend us in excess of $300,000. We took out a mortgage of only $122,250.

**mikandmari** · 01-01-2009, 10:40 PM

They base the payment on 36% of monthly gross pay (after other minimum payments), yeah, like that's realistic! Who cares about taxes, utilities, feeding the kids

We've been told we can afford a mortgage payment of $2300. Insane!

I like being able to pay the mortgage with one week's paycheck... which equals 25% of net pay.

I agree with Ladykemma2, it's smart to base things on just one salary. Basing debt on both salaries is why families are now less secure than the older generations. If the breadwinner became disabled or unemployed, the other could start paying the bills. A really good book on this subject is The Two Income Trap.

**cheles2kids** · 01-02-2009, 11:22 AM

That happened to us as well with our guaranteed VA loan.
We were preapproved for $250,000.00 and were buying in the $130,000.00 range.

I really think that is how alot people became overwhelmed with their mortgages, along with other sneaky lending practices.
Because they were "preapproved" for x number of dollars, they misinterpreted that to mean that they could "afford" that amount.

**Greebo** · 01-02-2009, 11:42 AM

The lenders pre-approve based on their own criteria. That they do so, while confusing, doesn't mean they're pushing you to borrow that much. It just means they'll OK that much.

I bought my 150k house with a 300k pre-approval. I made it clear at the time that I was only willing to borrow 150k. The broker understood completely.

I have no doubt that SOME brokers may have pushed higher loans - but seriously the burden of responsibility for borrowing too much money is on the borrower first, and the lender second. Unless a broker/lender LIED, they're not at fault for the borrower being in over his or her head.

**mama2James** · 01-03-2009, 10:07 PM

Originally Posted by Greebo

I have no doubt that SOME brokers may have pushed higher loans - but seriously the burden of responsibility for borrowing too much money is on the borrower first, and the lender second. Unless a broker/lender LIED, they're not at fault for the borrower being in over his or her head.

I totally agree. It's not in the bank's best interest for people to foreclose on their homes. I don't feel like the lender is trying to "trick" us into borrowing too much money, I just don't understand how anyone with our income would think they could afford a mortgage that big.