Payment Shock

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  • #66127
    kjenkins79
    Participant

    Quick question

    If your rent increases by the amount of your payment shock will they count that as payment shock. This new rent amount will put me at the price point I told my counselor I was comfortable paying for a mortgage

    #66129
    Nelsont
    Member

    Your payment shock should always be the difference between your current rent and your max approved piti unless that difference is small or negative in which case they want to see a $200 minimum payment shock. Your max approved piti is by default 31% of your monthly gross base income without overtime unless your monthly debts are over 9% or you specifically say you do not want to get qualified for as much as you can afford. If you want to get qualified for less 31% but are otherwise able to and you happen to find a house that will require that 31% or close to it then you you will be denied a loan and will have to re-qualify at the now higher amount that you could have been qualified at to begin with.

    #66132
    kjenkins79
    Participant

    I understand that but I do not want a $1900+ Mortage. If I gave the MC an amount that I am comfortable with; I am concerned now that my rent has increased to that amount that they will still want me to save the shock that was prior to the increase. If that is the case then my other bills and children will suffer

    #66134
    Kristijay
    Participant

    @kjenkins79 if your rent has increased I would submit your new lease agreement reflecting the increased rent to your MC. At the most, you might be required to requalify at that increased rent payment, but you should be fine. You will still, however, need to demonstrate a $200 savings comittment monthly.

    #66136
    Peapod0609
    Member

    @kjenkins79 Payment Shock is the difference between your rent and your mortgage. If your rent went up, your payment shock should likely go down, assuming you don’t want a higher mortgage than before.

    For example, if your rent was $1,100 and your expected PITI for your mortgage payment was $1,600, your payment shock would be $500.
    If your rent increased to $1,300 and you still wanted that $1,600 mortgage, your payment shock would be $300.

    In other words, no your payment shock doesn’t typically stay the same with an increased rent.

    #66142
    kjenkins79
    Participant

    Thank you. Spoke with my MC who just had me send over my new rent amount. The difference will be used as my payment shock. No additional funds are required to be saved by encouraged

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