Denied for a mortgage loan

[Jessica Beard]

I am anxious to get started in real estate investing, so today I tried to get pre-qualified for a mortgage loan trough Chase bank since my friend recommended it. I am looking at multi-family properties in the Cleveland, Ohio area. I applied for a loan with a projected home price of $50,000 and 25% down payment. I have excellent credit and only student loan debts. The advisor said due to a "high cost threshold" that I was not able to get approved. Does this mean my debt to income ratio was the problem? The only debt I have are my student loans, which I pay about $400 per month with about $23,000 left to pay off in total. I have good income and save more than double the mortgage payment would have been if I were to be approved. Do I need to try another bank, pay down my student loans or is there something else that I am missing?

Any thoughts or advice?

[Wayne Brooks]

No, "high cost threshold" is the reason it is difficult a low mtg loan amount line $50k. Federal reg.s make them add in closing costs, fees, etc to arrive at a true cost of the loan, expressed as an APR. $4k in fees adds a large % to a $50k loan....and only adds half as much "yield" to a $100k loan.

When the true APR for a borrower rises above a certain threshold, the bank can not make the loan

I probably didn’t explain it just right but the bottom line is you need to apply for a Larger loan amount.

It is very difficult for anyone to get a $50k mtg, it is not your particular finances. 

You need to get a loan officer to run your credit, look st your income and debts, and tell you what monthly payment You qualify for.