Increasing Qualification Amount

[Faith81]

I have a question. I asked my counselor but I am still waiting for a response. If my affordability form indicates that I have debt of $500 and all is credit cards and I have the Funds to pay off all credit cards. Will this increase the amount that I am qualified for and if so any idea of how much?

[Nelsont]

What is the minimum payment on your cards?

That is the most your qualification amount will increase by. But it will only increase if your current approval is less than 31% of your gross income.

Reducing debt is always a good thing but chances are if you are looking for a big increase you will need to look elsewhere.

Reducing debt really only makes a big difference if you reduce an amount equal to several points of buy down. Paying off a car or your student loans are examples.

Increasing your income would be the other way to increase your approval amount.

[Faith81]

The balance on the cards is about $6800. The minimum monthly payment is a little less than $500. I was just informed today that I will be getting an increase on my income due to a promotion but I dont know the final number yet. I am waiting for HR to finalize it but I dont know how long the process is and I am running out of time for my lease. Would it be a problem if I used part of my savings? My current approval is only $25 less than 31% of what was accepted as my gross income 🙁

[Faith81]

Also would there be a reason why my 30 year approval amount is only $1 more than my 15 year approval amount?

[Nelsont]

Congratulations on the promotion! That will instantly increase your approval amount without touching your debt and likely get you more than an extra 25/month.

Now if you can also zero out your credit card you are looking at potentially a big increase in buying power.

You shouldn’t be penalized for reducing your debt as long as you write LOEs and make sure your MC understands the situation before you do it.

The only thing I can think of for the approval amount being different is rounding. You are not approved for a 30 year or a 15 year loan. You are not even approved for a maximum mortgage amount. You are approved for a monthly payment and the choice is yours how you get there. Obviously a 15 year loan gets you a lower price mortgage but the payment will be the same. At a $1 difference I wouldn’t worry.

[Faith81]

@Nelsont thank you.

I would like to pick your brain for more knowledge:-)

Do you know how long I have to wait for them to consider my new income for an increase in the qualification amount? Would they accept a document from my HR Department since I am a salaried staff? Also my company actually moved from their previous location to a new location will this cause a problem for me? (The entire organization moved to a new office building)

I already paid down half my cards without touching my savings. I am going to use my savings to pay the rest off this week and write an LOE. I couldnt get my counselor to answer my questions regarding paying off my debt for the increase.

Thanks

[Nelsont]

I believe you need 2 pay stubs at the new income level. Not sure about the letter from HR but, it couldn’t hurt. Also not sure about the location change but you should definitely make sure that is documented.

[Faith81]

Thank you @Nelsont 🙂

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