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FHA Tightening Their Policies
During a face to face prequalification this past Saturday, I got to talking to a client. It turned out my prequalification amount was about $85,000 lower than the last one she had gotten. As we discussed further, I tried to work with her numbers to try to figure out how to make it work at a higher loan amount, but couldn't find a way. My back end ratio was up at about 56%. In layman's terms, that means 56% of her gross income (before taxes) would go to her monthly bills. These monthly bills do not include utilities, groceries, car maintenance or car insurance. In other words, she'll be lucky to be able to afford to live once she gets in to this house.
As I apologized for not being able to qualify her for more, we discussed the perils of such a prequalification. I explained her income has not changed in the last two years, she didn't pay rent and she was going to get a gift for her down payment. I told her I, personally, would not risk giving her a prequalification so high putting not only her Good Faith Deposit in jeopardy but also her financial well being. I got to thinking about how many times ... more

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