Buying A Home
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Our tech team has launched updates to The Nest today. As a result of these updates, members of the Nest Community will need to change their password in order to continue participating in the community. In addition, The Nest community member's avatars will be replaced with generic default avatars. If you wish to revert to your original avatar, you will need to re-upload it via The Nest.
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How much did the bank pre-approve you for?
I'm just curious, if anyone is willing to share.
How much did you get pre-approved for vs how much you actually used to purchase your home? I hear a lot of people say they got pre-approved for way more than they would spend because of budget issues. Did anyone use all the money the bank offered you? Did you find you over extended yourself with too much mortgage? Especially if you live in HCOL area.
Also, how many people did traditional mortgages (20% down) vs a FHA loan as a first time home buyer?
Re: How much did the bank pre-approve you for?
October 13, 2012
We didn't get an amount. We told her what we wanted to spend, and she approved it.
I know for a fact we would have gotten approved for A LOT higher, but we also knew exactly what we wanted to spend, so we just cut to the chase.
We're in a HCOL area and we actually skipped a traditional prequal. Based on the on-line calculators, we were getting home values ranging from $700-$850k (including our downpayment). While it would be very easy to spend that much around here, we were NOT comfortable with those numbers and instead specifically requested a prequal letter for $600k. We're actually hoping to spend $500-550k with 25% down.
Property taxes are really high in our area, plus we factored in estimated car payments (we currently own both cars outright), day care costs for 2 kids (yet to be conceived) and a monthly buffer, all based on our current salaries. From there, we determined how much we felt comfortable with as a mortgage payment. I'll be honest, we're now looking in a different town than we originally targetted, but the school system is great and our budget will go further there.
We're admittedly pretty financially conservative though. So to us, it wasn't worth overextending ourselves, being "house poor", skipping vacations or having to put off big life decisions (like kids) because we don't have enough left over at the end of the month after paying the mortgage. You've got to figure out what lifestyle you're personally really after.
We pretty much did the same thing. We knew how much we wanted to spend, so we asked our MB to write the preapproval letter that we had to submit for that amount (didn't want the buyer to think we had a lot of "cushion."). We would have been approved for significantly more--but knew what we were comfortable with.
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This. We put in an offer about a month ago (they quickly took the house off the market, which stunk) and we requested a new prequal letter specifically for our offer for $550k for the same reason.
Do you mean the seller of the home you bought? That's really interesting. Would a potential seller know how much you qualified for?
exactly this.
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We were approved for about $400k and borrowed $248,000.
We did a conventional loan with $20k down. ~7.5%
We had intended on doing more down ($30k) but when the house underappraised and the sellers backed out of helping with closing costs we had to take away from our DP.
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We were pre-approved for $264,000. The monthly mortgage payment on that would have been over 40% of our income. Not cool. In my area $264,000 will buy a gigantic house on a few acres... it's a very LCOL area.
We spent less than half of the pre-approval amount. At the time our mortgage (+ taxes and insurance) was about 20% of our take home. We've both gotten raises since then so it's even lower than that now. But at the time, we wanted to go no higher than 20% of take home.
We had no downpayment. It was not required with our mortgage type.
http://pandce.proboards.com/index.cgi#general
My Valentine Bookends (2~13~13, 2~15~09)
In our case, we purchased a bank-owned foreclosure and were required to submit a preapproval (or pre-qualification---I can't remember now which one) with our offer.
My Valentine Bookends (2~13~13, 2~15~09)
Exactly this. We asked for a preapproval letter of $430 and that's what the broker gave us.
If there are multiple offers on a house, your realtor may suggest that you submit a copy of your pre-approval letter with your offer. Reason being that an offer that comes with a pre-approval letter typically holds more weight than an offer submitted by a party that hasn't bothered to obtain a pre-approval.
http://pandce.proboards.com/index.cgi#general
Do NOT go by what the bank will approve you to borrow!
Do NOT spend more than 25% -28% of your TAKEHOME pay for housing (mortgage+PMI+taxes+insurance+utilities+HOA dues if applies). In a HCOL area 30-35%.
IF you do not have a budget - start tracking your spending to see if you need to adjust your lifestyle etc.
Make sure you have saved closing costs, downpayment, moving costs, start up costs, repair/renovation costs, decorating & furniture/appliances and a host of small items that you need with a house - lawnmowers, ladders, tools, garbage cans etc.
Banks will still lend more than most are comfortable paying each month ----YOU determine what is comfortable.
Your FICO score, income to debt ratio will play into the interest rate for which you qualify.
We put down a HUGE downpayment rather than increase the cost of the home we could buy. Paid off the mortgage in 10 years and bought our 2nd home and paid that off in 4 years (not a huge jump in new home cost vs old house selling price).
Make sure you have an emergency fund in place (4-6 months EXPENSES) to allow for an illness, job loss etc .
If you plan to have children - will you go back to work or SAH? Can you buy on one income?
2 good books to read - House Buying for Dummies and Mortgages for Dummies --- tons of helpful information
We were approved for 4x what we spent on our mortgage, but we are in a LCOL area. The house we bought was plenty for us right now and for the foreseeable future, and I didn't want to stress about paying the mortgage. We debated between conventional and FHA, but ultimately went with the FHA and did all the renovations we wanted before we moved in.
H and I were preapproved for an FHA loan of $325K but used $262K. We felt that a lower mortgage payment would allow us to keep our lifestyle and save more for the future. The home we bought is better than the ones we were looking at for higher, so it all worked out!
We were approved for over 700K and we just bought a house for 350K (will be closing in Jan).
We feel comfortable with the idea of paying about 22% of our take home pay. The house is really big and relatively new. There was no need for us to spend more than what we could get in the town we live in. We plan on living there for at least 10 years with the interest rate being really low.
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We did a traditional mortgage but with 16% down. We've also made a few extra payments towards the principal to cut down on how long we'll be paying PMI.
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Everyone welcome.
We did this also. The preapproval letter we submitted with our short sale offer was for the exact amount we were offering.
? ?????????! Z!
BFP #1 EDD 12/14/12, C/P 4/9
dx: DOR
Clomid + trigger + IUI #2
Everyone welcome.
We also didn't get an amount. We knew we wanted to be around $150k, and they preapproved us for that. But the lenders we talked to said we could go well over $200k. The house we are buying will actually be $187k (house of my dreams) with them paying closing costs, 1 year warranty and $2k of special assessments. So we went a little higher than initially planned. We never got a letter, but everything is in order and we're just waiting for the appraisal after they fix some handyman electrical issues.
We are going to do an FHA loan with 3.5-5% down depending on how much we have then. We set our closing date for late January so we have a little more time to save.
We were approved for $680,000, we will be using around $425,000 (that is the max we are willing to spend). DO NOT want to be house poor. If we spent $680,000 we would be eating ramen, my student loans would be in default and we wouldn't be able to put gas in the car. I cannot believe the amount that you can get approved for! We are doing FHA with around 5% down.