is this the new way mortgage companys are screwing people?

Deal Score0

I qualified for 100% financing and with no change in credit (720-730), no change in income, and 6,000 more in saving from when I first applied they changed my 225 approval (I have in writing) to 150 the day that I was going to put a bid on a home for 176.
Same thing happened to a guy my husband works with. He went from 150 down to 110 and didn’t find out till after he put a bid on a house for more than 110.
Not sure what is going on cause even after all the credit stuff changed with lending I had called to check and see if everything was okay with my loan and they had told me everything was fine and even told me they were happy to see that I was being responsible . go figure!

In all I want to know is why my approval change and how can they do that!?

Was going through USAA conventional 30
I have no debt! My car is paid off and is worth 15,000 and have no credit card debt at all!
if I go with a VA or FHA loan will I be approved for more?
it IS a 30 year fixed @ 100%

8 Comments
  1. Reply
    Serge M
    February 13, 2011 at 1:47 am

    No the mortgage company is not cheating, they are simply protecting themselves. The problem is the 100% financing you mention. That’s a sub-prime mortgage and many of them are now in default. Banks are getting stuck with foreclosed properties because with higher interest rates, borrowers could not repay their loans. So the rules have been tightened and the amounts banks will lend to a borrower are now much smaller.

  2. Reply
    CHARITY G
    February 13, 2011 at 1:51 am

    We have only seen the beginning of the mort. crisis . . . if you need a home immediately take the 150 and run . . . it’s only going to get worse.

    P.S. 40% of the Merill Lynch write downs were from funds of “A” and above credit ratings . . . it’s really scary.

  3. Reply
    Ken
    February 13, 2011 at 2:17 am

    Interesting that an industry in crisis would turn away $ 75,000 in new business from a good customer. I have not seen this happen but I have seen stranger things. I would try another mortgage company and see what happens.

    Good luck.

  4. Reply
    Mary B
    February 13, 2011 at 2:49 am

    When the PROGRAM changes, your approval goes out the window if you haven’t closed yet.

    You think that’s bad? Try showing up FOR CLOSING to find out your loan has been pulled off the table b/c the mortgage company went out of business that had been approved for two months.

    It can also happen if you don’t have a change in credit but if you misrepresented your DEBT.

  5. Reply
    Landlord
    February 13, 2011 at 3:24 am

    I have not heard of this happening, and all of my social group are buying houses left and right.

    I think you are reading something incorrectly. Conventional loans are not 100% financing. 100% usually goes to ARM loans. The loan companies are presently (or soon to be) required to make sure you are qualified to pay after the adjustment. This would explain the drop in the amount, they are talking about you qualifing for the real loan amount, not the teaser rate. The problem many people had before is they qualified at the teaser rate but then could not make their payments once the loan matured to its actual rate.

    The rate on conventional loans never changes, it stays at the initial rate thought the lifetime of the loan.

  6. Reply
    matsonb
    February 13, 2011 at 4:05 am

    Your good credit scores and no debt aren’t the issues. Your income compared to your monthly payment is. Ask your loan officer what your Debt-to-income ratio is. You can probably go as high as 45%… see what Sales Price 45% will take you too, and you will know that is the max you qualify for. http://www.choicefinance.net/

  7. Reply
    Al Rozz
    February 13, 2011 at 4:10 am

    I was approved for 150 through the Bank to buy my house.
    VA approved me for a 200k.

    The difference with VA is that guranteed loans are protected by your Federal Government where your loan outside of the Government is not guratedd by the VA it’s guranteed by your credit score and your ability to pay back.

    Most down payments that are assuring are at least 10k. I went to Bank of America with 30k down on a house valued at 52k and was rejected no matter how much credit I have and no matter how much money down I had because the Bank was not going to make money off of me.
    When they Bank offered to take 20k down they would finance the house for me.

    I paid cash money for the house and the bank had a fit and lost my business.

    Buying and selling homes are not about cheating anyone out of their money, it’s about making money on the sale.

    A woman or man with money will learn experience and the woman and man with experience will get the money.

    Two years later I sold my house for $ 60,000
    Who gained the upper hand?????
    Case Closed

  8. Reply
    DP1980
    February 13, 2011 at 4:46 am

    Interesting that they would drop your limit down like that with you being an apparently strong borrower, but unless you have a signed loan commitment (typically not done without a subject property) the rate, terms, or limitations are subject to change. With mortgage money becoming tighter, some companies will have to adjust their lending policies accordingly. It’s unfortunate, but on the bottom of your letter it will probably have words stating that this is not a formal committment to lend you the money.

    As others have suggested, shop around. You may do better off with a different company. Talk to your current mortgage consultant about FHA and other financing options (to qualify for VA you have to be military, if so then discuss this as well). I definately would encourage you to do several things.

    1. Shop around, sit down with at least 3 different mortgage consultants and ask for a Good Faith Estimate and ask that they estimate anything that could be variable on the high side (it’s the fees and points that you want to pay attention to as well as the rates quoted). The Good Faith Estimate will not only give you something to compare, it will also give you something in writing to refer back to should your closing costs or rate end up being different from what you were originally told. Choosing your mortgage consultant should be a combination of price and your comfort. Yes, cost is important, but don’t deal with anyone you don’t feel like you can trust. It’s not worth a few hundred (or even possibly thousands, I’ve had clients use people they were uncomfortable with because they had the cheapest rate only to find everything change at closing) bucks to have to work with someone who seems shady or unprofessional.

    2. Avoid anything other than a fixed rate product. The majority of the defaults are occuring because of rates that have adjusted upward.

    3. Work with someone you can sit down with. If there are problems, it’s important you or your REALTOR (ideally you’re working with one, commissions are pre-negotiated and include your representation with all listed properties) be able to sit down with someone and talk face to face to work out a problem.

    4. Since I mentioned it, get a REALTOR to work on your behalf. Again, you don’t pay them, the seller does and it’s already pre-negotiated if there is a real estate sign in the yard. It’s one of the few times you can get professional representation for free in a purchase, and ideally you’ll have interviewed a couple and you can ask questions such as these of your agent and they’ll be able to knowledgably answer.

    Good Luck to you in your upcoming purchase. It is a hassle, but home ownership is still a great investment.

    Leave a reply

    Register New Account
    Reset Password