Payment shock still needed?

[NACA_Dreamer2020]

My husband and I are trying to qualify for a home at the same price of our rent. Our MC keeps telling us that we need to show $200 or more of savings each month for payment shock. Is this correct even though we are trying to qualify for our same amount or less?

She also does not seem to understand that we have set aside $1100 this month in savings and still insists we are not showing payment shock—this is our first month. HELP! I just want to make sure we are understanding correctly.

[Nelsont]

Short answer would be probably not. However there is a chance your MC is qualifying you for 200 more than your rent. Unless you specifically say you don’t want to be qualified for the max that’s what they will run the numbers on. So if your max amount is 200 more than rent that’s what you need to work with.

Payment shock cannot be averaged. 1100 in 1 month is fantastic. But that’s 1 month. The idea is that the sum total of all bank accounts needs to grow every month. Missing by $10 is the same as missing a mortgage payment. If you had a mortgage and made a double payment then next month you skip a payment the bank still puts you on the hook. Payment shock is not have you saved it’s can you continue to save.

[NACA_Dreamer2020]

I mean, it’s the max we would want to pay because it’s a lot (over $2000) so I don’t find additional funds necessary nor do we want to qualify for more because it’s plenty.

Also, I realize that it’s just one month, but she said we had no payment shock whatsoever, which wasn’t the case for the month in question.

[Nelsont]

When I say max I don’t mean max you want to pay. The max you can qualify for is 31% of your income. If your debt is low then your MC will automatically run the numbers for 31% of your income. If you want a mortgage payment less than 31% that’s fine. If you want to be qualified for less than 31% then you would need to explicitly state that. Otherwise you will be locked into payment shock. But really why if you don’t mind me asking is this such a big deal? You seem to have it all together so 200/month will be easy.

The qualification is like the speed limit. You can go lower but not higher. If you get qualified for less than you are able to you can run into issues down the road unless you buy an extremely cheap house relative to your income. Like 20% not 31.

[NACA_Dreamer2020]

I guess what I am saying is that it feels like it’s prolonging the process without explanation because it’s trying to qualify us for an amount we don’t want/won’t use. For something we don’t technically need to show which we saved over and above what was asked-yes for one month, but why are we to wait 3 months for something we are not asking for?

[Nelsont]

This is how the system works. Most members are not in your position and need the structure. Just be grateful you are in the situation you are in.

[NACA_Dreamer2020]

2000 is Less than 20% of our income as is. We want less than 31% is sort of the point.

[Nelsont]

You need to tell your MC. It’s a formula. It’s not a number you pick per se. You need to plug a number into the system so you need the system to say 20% max.

[NACA_Dreamer2020]

We have told her this. That’s why we are confused and unclear on the process and reasons.

Also, thank you for at least attempting to offer clarity. The payment shock threw me off but then to have set aside $1100 in one month and be told we are not budgeting/this doesn’t count leaves us feeling like we don’t know the process and, therefore, won’t ever be ready in her eyes.

• This reply was modified 1 year, 1 month ago by NACA_Dreamer2020.

[Nelsont]

The reason is to see that regardless of prior history you can sustain and maintain the requirements while an active member.

They treat every member equally. That means members with a 500 credit score will actually be considered for a loan and members with an 800 credit score and a million dollars in the bank will not get preferential treatment and need to meet the same requirements. I understand your situation and the program is not for everyone but this is how it works.

• This reply was modified 1 year, 1 month ago by Nelsont.

[NACA_Dreamer2020]

I want to be clear: Overall, I am not questioning the requirement nor am I asking for preferential treatment in meeting the requirement. What I am saying and am still not clear on is why/how we are not meeting the requirement? And also why is payment shock a requirement if we are not asking for higher qualification. In speaking with others, this seems to only be needed if/when asking for higher mortgage payments.

We are and have been asking our MC these questions but get talked into circles, which is what caused me to come here hoping for better or clearer understanding.

[Nelsont]

Without knowing your specifics the only reason you wouldn’t be meeting the requirements is because you are being qualified for more than your rent and thus must show payment shock. Also without knowing specifics I don’t know why 1100 wouldn’t be enough for 1 month of payment shock.

Payment shock is not a requirement if you aren’t asking for a higher amount but obviously your MC is not on the same page as you.

[NACA_Dreamer2020]

In thinking on it further, I think it may be a language barrier. By our names, whoever set up the appointment incorrectly assumed our language preference. We had no idea until sitting down. We speak her language, but it’s definitely my second language. I explain so much better in English, but English is her second language. At this point, though, do we request another MC? I don’t want to insult anyone, but I really think it could be playing a huge part in the misunderstanding.

[Nelsont]

You can request a new MC. There is an approval system you need to go through and you aren’t guaranteed a switch. In your case it might be a good idea. But you can only do it once and you will essentially start over. Not with your timelines but with intake.

[Kristijay]

This actually isn’t your payment shock requirement at all, but is addressed on pg 18 and 19 of the current qualification workbook in regards to budget. It is listed on the budget worksheet in pag 18 right above the monthly savings commitment. This requirement is also addressed on pg 19 under monthly savings comittment where it states, “You must add at least two hundred dollars to the total expenses to address unexpected or one-time expenses (“Hoysehold Savings”).

[Author]

Posts