Approved Mortgage Loan Not As Much As I'd Hoped For

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Approved Mortgage Loan Not As Much As I'd Hoped For

Sean Pearce
Member since 2016 · 8 posts · 18 votes

So I've applied for my first mortgage ever on an investment property. I have good credit fluctuating between 760 and 790, net monthly earnings just shy $10,000.00, over 2 years in my current profession, no current housing rental costs, $0 in debt, and $70,000.00 in liquid assets and capital. A 'preferred' mortgage broker that was recommended to me looks to only be considering about 71% of what I've asked for to get me into a property of a value that I'm comfortable with including my 20% down payment. 

My question is, will shopping around and applying for another mortgage with a different broker help or hurt my chances of gaining a bigger loan since my credit was already dinged once during the broker's due diligence and another application will likely ding it again?  Also, is this reduction in available credit the result of the mortgage rates going up and what I can expect from most brokers at this time?

I really did not expect to not get my desired amount especially since I did not consider the desired loan amount to be large. It's far below the current median house value of the USA and right inline with the median value of my desired market.

thanks in advance. 

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Joe Fraga
Verdi, NV · Member since 2016 · 16 posts · 7 votes
4y

When applying for a home loan any inquiries within a 30-45 day period will all count as one. It's best to try as many as you can. That way not only will you find the best rate, you will also get to know different lenders and their personalities. Different lenders can do different things.  

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  • Matthew CrivelliBusiness Member
    Lender · MA · Member since 2021 · 1k+ posts · 1k+ votes
    4y

    @Sean Pearce 

    Rates are going up very quickly. Your buying power will continue to go down. The longer you wait the less you will be able to afford. This is not isolated to one broker unfortunately. 

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    2Reply
  • Joe Fraga
    Verdi, NV · Member since 2016 · 16 posts · 7 votes
    4y

    When applying for a home loan any inquiries within a 30-45 day period will all count as one. It's best to try as many as you can. That way not only will you find the best rate, you will also get to know different lenders and their personalities. Different lenders can do different things.  

    3Reply
  • Tom Fidrych
    Member since 2020 · 241 posts · 179 votes
    4y
    Here's a quote from experian's website:
    "What about when you are shopping for a loan?

    When you are shopping for a new loan, such as for a home or a car, your information may be sent to multiple lenders to try to find you the best rates and loan terms. You will see a separate inquiry on your credit report from each of these lenders, but your credit score won't be penalized for each one. Most credit scores will count multiple inquires for mortgage or auto loans as one if they are made within a certain period of time (14-30 days). Some scores do the same for other types of lending."

    So multiple inquires shouldn't affect your score. I'd always recommend getting at least 3 opinions/quotes.

    Given that lenders actually use your income(versus in the stated income fueled bubble) to determine your qualifying amount, then yes, as rates rise you will qualify for a lower loan amount.  This should cause home prices to flatten or likely decrease to some degree in the future. 

    2Reply
  • Roger Flot
    Investor · Mississippi Gulf Coast · Member since 2019 · 55 posts · 53 votes
    4y

    With regard to your credit getting dinged, if you are talking about inquiries, I believe inquiries within a certain time period ( I believe its 45 days, but who really knows) for the same type of credit dont really pile up against you.  It is assumed that you are shopping around.  Of course when you get with the underwriters, they will want you to verify whether or not you acted on any of the other inquiries (taken a loan with someone else).

    I am in the closing of a purchase now where I went to one of the large brokers, a private broker and my credit union all within a week.  The results were disappointing at 20% down payment.  When I changed the downpayment amount by a few percentage points, it certainly opened up opportunities... but in each case, I had to inquire what would be available if I did this vs that.  I compared the results, then I would tweak my query some more.  Sometimes it seemed I was doing all the driving and they were just plugging in numbers into their programs and eventually we found a happy place that really wasnt that far from where we began.

    So, in my limited experience, I would probably continue to shop around.  Think of scenarios that will work and think of scenarios that wont work and find the variance, play with it... have them plug it all into their computer and maybe then you can see the strategy that works for your personal situation.  Be aware that it can change though, sometimes very quickly.  

    I am not advocating wasting their time, but I got the impression that there are certain tranches where some calcs are allowed and it may be due to location or price or down payment or rate or really anything, but its up to you to help them help you find it.

    1Reply
  • Sean Pearce
    OP
    Member since 2016 · 8 posts · 18 votes
    4y

    Thanks all. I'll shop around some more. 

    2Reply
  • Caitlynd Fawn Born-Dohm
    Realtor · Crystal River · Member since 2021 · 33 posts · 13 votes
    4y

    You should definitely shop lenders during your grace period. Right now, FICO knows you are shopping, so each inquiry isn't going to ding you as many hits, but as one. In fact, they encourage you to shop. Keep in mind, though, that rates are on the rise. Remember not to get so caught up in getting the preferred amount that you forget to lock in a good rate. Wishing you the best of luck!

    1Reply
  • Jon KellyPro Member
    Investor · Bethlehem, PA · Member since 2016 · 929 posts · 951 votes
    4y

    @Sean Pearce as others have said, don't worry about the credit pull. Your score will drop slightly but will recover quickly. It's much more important for you to shop around to find the best rate. 

    Things are changing quickly in the lending space. So, a lender (broker) that was great 6 months ago may not be reliable anymore. 

    Your credit and debt to income is great. Real estate investing experience is going to be an issue. Many lenders will decrease the LTV% the less experience you have.

    Continue to shop around and try to find the best terms. Don't let this stop you from buying a property and getting started in the game. Your second property will be a lot easier because of what you're going through now. 

    1Reply
  • Galen Ikonomov
    Member since 2021 · 256 posts · 213 votes
    4y

    As a Mortgage Loan Officer and also myself personally experiencing it, I am going to advise you to shop around. I have always told my clients that they should not worry about their credit pulled the next 14-30 days from the day their credit was pulled as a Mortgage Inquiry.

    Also, unfortunately the Mortgage market was flooded with people that have no idea what Mortgage is working as Mortgage Loan Officers and they are not thinking out of the box when it comes to helping people, but following what their managers told them to do- "Do the application". I have had so many people calling me and telling me how frustrated they are, because they worked with at least 5 companies, YES -5, and the LOs were not able to help them. When I looked at the situation it was about being creative and thinking out of the box. Give the opportunity to more people to look at your situation. I would consider working with another broker... and broker only :).

    1Reply
  • Ned CareyPro Member
    Moderator
    Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
    4y

    @Sean Pearce ask him (or her) what criteria they are using to come up with the amount. 

    1Reply
  • Camile Case
    Lender · Miami, FL · Member since 2022 · 135 posts · 31 votes
    4y

    @Sean Pearce Mortgage Credit Pulls are good for around 30 days without hurting your credit. Are you looking for 80% LTV and not getting that? Which city/state is the property located in? What is the acquisition cost?

    1Reply
  • Sean Pearce
    OP
    Member since 2016 · 8 posts · 18 votes
    4y

    Thanks everyone. I applied at a few more places and my experiences with some of these other brokers has been much better. The last broker I applied with gave me much better terms than the first. The first broker has only communicated with me over email so far and the process has been dragging on for the better part of a week. The last broker called me immediately and we talked through all of my options and I had an approval within 20 minutes. 

    2Reply
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