Can I get approved for a bigger mortgage if my rate goes down?

Question

I was recently approved for a FHA loan $130,000 at 7%. If I can get a rate of 5 or 5.5 through a builder, will I be able to borrow more money? How much?

thanks

Jon

Answer 1

I don't know how you would get a loan @ 5.5% through a builder, but lets say you do. You would qualify for about $150,000.00 - roughly!

Answer 2

Not much more.  Your mortgage approval is also based on your credit history, not just how much you are borrowing.  Talk to your loan officer to see if they can do anything about the terms.  It sounds like they can't though...if you are at 7%, I am guessing you have some credit bruises.  Also, DO NOT keep having lenders, builders, etc pull your credit.  Each time it is pulled, your score goes down.

Answer 3

Entirely possible. If you are looking to get approved for a traditional or FHA loan, it will be based on what your monthly payment will be. If your payment on $130K @ 7% will be the same as $150K @5.5%, then very possibly. However, if the builder will be carrying the loan (???) he gets to determine the terms by which he will qualify you. He who holds the money makes the rules.

Answer 4

It depends on how the builder is getting you 5.5% rate.  Is he offering a temporary buydown?  If so, you now have to qualify at the note rate so that would not help you.  If he is buying your rate down with points, talk to your lender, you may be able to go higher.

Mortgage companies (no matter how many) pulling your credit in a 30 day period will not alter your score at all.  I doubt the builder pulled your credit.  I don't know why the first poster made that comment.

You should be able to get 6.5% rate no points, no origination, on a 30 day lock if your credit score is decent.  Be aware that FHA made some pricing changes effective July 14, 2008 based on risk.  Your upfront MIP & monthly MIP could be higher than you thought.