Can a loan amount allowed be changed after approval even without any credit changes except payments?
I was approved for a 60k loan (as a refinance technically) on my house which was purchased originally with my parents line of credit so that we could make the repairs before getting the loan. about 2 weeks went by after the "You have been approved" email came through and I am now told I can only get a loan amount of 44,600 which is 20k less than required to pay off the line of credit into an actual mortgage. how is this even possible? by curtis_643_509 from Amherst, Ohio. Oct 2nd 2012
Travis Torcoletti (travis.torcoletti)
#0 ranked lender in South Carolina - 372 contributions
Did it only appraise forthe $44,600 amount? That's what it sounds like happened.
William J Acres (William_Acres)
#74 ranked lender in Arizona - 8,728 contributions
When you get your "You've been approved" email, it wasn't a lie.. You are approved, but after your "Complete" file was underwritten, they approved you for a lower amount.. This could be for several factors.. it could be your income is lower than stated.. or it could be that the home value is not sufficient to allow for their Loan to Value guidelines.. Best thing you can do is call them and ask why is it lower than what you applied for.. they won't keep it a secret from you... I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com
Travis Torcoletti (travis.torcoletti)
#0 ranked lender in South Carolina - 372 contributions
OK, well then if the property was sold in June and you are attempting to do an FHA loan they have a 90 "flip rule" that will prevent you from being able to resell the house within 90 days of the purchase. They further will not allow said home to be resold for an amount greater than 20% of the original price within 180 days. If you are getting an FHA loan then this must be your problem.
The email stated I was "Approved for 60k" and the appraisal came back at 72k. The house was originally a forclosure bought in june by the line of credit and supposedly because of that the loan officer stated that the underwriter can only loan for 85% of the price we purchased it at, which was 52k, regardless of all the improvements we have made (almost over 15k).
Thank you for your help in understanding what has happened. Why they make FHA such a pita is way beyond me but its not my choice so I guess I'm stuck at this point. Is there any other possibilities I could look into to get this Line of credit into an actual mortgage that I can afford more easily than the almost 1k payments (not even including insurance/taxes)?
Kimberly Lawson (kilawson)
#54 ranked lender in Ohio - 150 contributions
Cash out max loan to value is 85%. 85% of the lesser of the purchase price or appraised value if there isn't enough seasoning, which sounds like is the case. If you are trying to purchase the home from mom and dad then pending on your credit and where the home is located would determine the max loan to value you would qualify for. You mention "refinance" which leads me to believe they already added you to the deed. In which case, cash out, again you are restricted to 85% regarless if it is FHA or Conventional financing. On Conventional you'd have to have credit in the 700's to be eligible for PMI, meaning eligible to finance over 80% of the value/purchase price.--- if 60K is 85% and 44,600 is even less then the only other variable to take into account would be debt to income ratios. Your best bet is to ask whomever issued you the letter as to why they've reduced it. You'd have a clear and concise reason versus generic guidelines given as answers here. If I can be of further assistance let me know. T: 888-659-3848 Kimberly Lawson Ohio: LO.004495.000 NMLS.5601
Yes, I am on the deed. The original purchase price was 52k, we then used more of that same line of credit to do major repairs to the house including a completely new bathroom (all the way down to the studs) and ceiling underneath and other things bringing the total to just under 59.5k after taking out the payments I have made on the line of credit right up to the date I requested the loan. The approval email I am referring to came after my credit was run and i have made no changes other than make payments on items I have owed on for over a year (wedding ring for wife mostly). Since I am now at 58k, it would be very impossible to manage still paying on the line of credit and a loan that only covered part of that amount. I just wanted to include the above information just to make sure i had included all of the information and also in hopes that someone would see a possibility I could go for to get an actual mortgage.I am told by my personal bank (not the same people whom has already "approved" me) that I can refinance in 6 months from the purchase date without problems and to include all of the line of credits amount, is this even true or is this another batch of false information?On a side note, I am extremely impressed with how fast I received an answer here. I regularly use forums for my computer programming work and have never before received responses to my questions so quickly and efficiently. Thank you all for your expertise and assistance with this matter.
Travis Torcoletti (travis.torcoletti)
#0 ranked lender in South Carolina - 372 contributions
We all work on commission Curtis, so we have to be prompt and courteous :) Your bank is correct though, after 6 months, 180 days, that will put you outside of the title seasoning issues you are facing now and causing you so much grief. It's possible that you may find a local lender who will do this loan in a "portfolio" (i.e. they are loaning you their own money and do not intend to sell it off) but most lenders today follow FHA guidelines when it comes to these types of issues. Good luck to you.
Derick Condron (rightstartoregon)
#30 ranked lender in Oregon - 598 contributions
There is a difference between you are approved and the file is fully underwritten. I would say something came back on either your income or the appraisal that were in the conditions of the approval that lowered the amount you could qualify for.
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