$40 bucks below monthly shock payment, but I saved almost $200 extra last month

Home Forums Purchase Program $40 bucks below monthly shock payment, but I saved almost $200 extra last month

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  • #62896
    JR0312
    Member

    Is this an issue? Miscalculated some things and came up $40 short this month for my shock payment.

    #62898
    Nelsont
    Member

    Yes.

    Unfortunately payment shock is the absolute minimum that must be saved until the day you close and cannot be averaged. The exceptions are paying down debt or a one time emergency such as hospital bills.

    The reason is because the payment shock is used as a faux mortgage payment. If you are even $10 short on your mortgage this month then that is considered a late mortgage payment. Even if you paid $200 over last month or next month you make it up next week or next month that $200 is applied toward interest unless you specifically designate principal. In both cases the bank will always leave you on the hook for an on time full payment every month until the loan is paid off. In the even you make 1 extra payment AND apply it toward principle the only thing that does is have you finish off the loan in month 359 instead of month 360.

    :/

    • This reply was modified 2 years, 8 months ago by Nelsont.
    • This reply was modified 2 years, 8 months ago by Nelsont.
    #62902
    JR0312
    Member

    Thanks Nelson. Well I did pay down a credit card by almost $1800… the min was only $250. Does that help me in anyway?

    #62903
    Peapod0609
    Member

    Yes, payment shock is not an average, you have to do it every month without fail. Granted, if there is a good reason that you were short in there (hospital bill, paid down extra debts, some fluke thing happened, etc) you can write a letter of explanation for it and you can still be fine. It just depends on what happened that month.

    My payment shock was so all over the place I had to create an Excel sheet to explain it, haha. I had 2 open accounts, 2 closed accounts, a few one time payments, a few one time things of money coming in, paid off some debts, etc. It was a lot, but I laid it all out for the underwriters and they accepted it.

    #62905
    Nelsont
    Member

    Paying down debt, while always a good idea, will only help in terms of skipping payment shock if your monthly minimum payments decrease. Because this was a credit card that should help you out.

    If you had a $10000 loan @ $400/month then paying off $5000 of that loan will not lower your monthly payment. But a credit card yeah that will since your minimum payment is a % of the total. SO using that example if you had $10000 in debt payments and you paid half and not your monthly obligations are $200 instead of $400 you were definitely helped out.

    #62910
    JR0312
    Member

    Whats the consequence for being below shock payment for a month? I’m waiting for my file to come back from the underwriter for qualification. If I am qualified and prior to submitting this months bank statement which is below payment shock, am I good?

    #62912
    Nelsont
    Member

    Yes I believe you will be qualified one of the conditions from the underwriter is to provide your most recent statement or even up to the day bank transaction history print out. But I’m pretty sure you will need to meet the time restrictions again before you can get credit access approved.

    #62918
    Peapod0609
    Member

    If it comes up, I would write a letter of explanation saying you were paying down debt and just see what they say. It could not hurt.

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