Hi everyone! I am a real estate agent with a loan question I hope someone can help me.

I have a client that got approve for 100k we found a house that she was interesting in purchasing for $104,900. I got it reduced to 101k with 3% in closing costs help.

The problem is my client got approved for 100k not 101k. Her loan officer seems to be very unorganized and unprofessional he first told her she was approved for 104k and then told her 90k. It turns out he was looking at the wrong file and had the numbers mixed up.

When I presented my client with the final offer of 101k she then asked her loan officer what her options would be, because she really wants this house. He then proceeded to ask my client questions like how much would the closing costs be and how much are the taxes a year. If I am not mistaken he is suppose to tell her all of that information in the gf estimate. Another thing the loan officer told her was that the the closing costs would be $5530, she explained to him that we would be getting closing costs help. He told her that would go towards the down payment. She is not putting a down payment so I'm not sure what he means. He then told her because its an FHA loan they require so much he's going to do it with another program they have something called Community.

I'm afraid if he does get her approved something will end up being wrong when we close.

I have offered several times to look at other homes and not be pressured to buy.

Any help would be appreciated. Thanks!

It sounds like he is looking at a My Community loan instead of FHA. My Community is an FHA clone and a great program especially for Realtors becasue they do not have to go thru the FHA appraisal process. My Community rates are similiar to FHA, and it allows for a full 100% loan instead of the 97% FHA program. Debt to income ratio will control your clients max loan amount, but I seriously doubt that the extra $5.00 a month added to the payment at $101K vs. $100K will not affect the Debt to Income ratio. As a broker I make less when I close a My Community loan vs. FHA/VA loans, but the lack of B.S. makes it worth it for everyone.

I like the My Community program as well and PMI is deductible now, with some restrictions.

There are some loan programs that a borrower can take a slightly higher rate to not have PMI which can be fully deductible. You'd have to weigh it out and see if the payments will benefit the client with or without PMI and factor in how much deduction the borrower can qualify for.

Otoh, the borrower can potentially get rid of the PMI eventually.

Yes, you're right, the borrower can eliminate the PMI eventually, but that is through time by way of paying the principal to under 80%.

I always like to look at the positive tax implications for the borrowers from the get-go

Makes sense to me. FTHB's in particular just are not likely to stay in the home long enough for the equity to build that much.

I just like spreading the word about PMI, I wish that info was getting to agents more efficiently, it sure could make a lot of difference to some buyers.

I also wish more FTHB's understood the true cost of renting vs buying when the tax issues are factored into the equation.

Absolutely right! It's a great feeling when the FTHB is educated to their best interest... it makes the whole mortgage and homebuying process that much easier!

Yup, I realize that they are generally in a state of complete terror and find it also helps to point out that if they are currently renting, they are already paying a mortgage. Just not *their* mortage and no doubt the landlord really appreciates the help!

I also encourage my FTHB's to talk to a tax pro and find that CPA's are generally very supportive of the decision to buy.

That is a great and realistic point to make!

I wanted to thank everyone for your helpful information. My client is getting an FHA loan and they approved her for the 101k. She told her loan officer that she would get a guaranteed raise every year and he then approved her. Is this normal?

If it's approved, then I say why question it? The FHA loan is a manual "human being" undewriting process. If you need flexibility in loan guidelines, this program still has it. What you describe is a client who is at the maximum allowable payment on $100,000 loan but needs $1,000 more to buy this house. That may put your client outside the guidelines, but that "risk" is off-set by knowledge that the customer's income is increasing year-over-year.

That sounds to me like a make-sense underwriting decision.

congrats!

Sounds normal to me. With FHA you can have "bonus" factors like the fact that her income is going up. It sounds to me like he had his underwriter pre-approve her for $100k. Well, then she finds a home for $104,000 and he had to find a reason for the underwriter to allow for the higher payment than what they were approved for. First of all, if your loan officer was looking at FHA or My community to the begin with you should feel blessed as these are the two best loans out right now for most clients (along with VA and USDA loans) and they beat the pants off of any Sub Prime deal.