Mortgage Expert John Veenstra: Down Payment

10 Jul 2018 | 12:38

More important than the size of any down payment is that you qualify for a mortgage no matter the amount of the down payment that you have from all allowable down payment sources (last week's article). This means that income and credit scores and history enable you to qualify for a mortgage with the down payment money you have.
If you work with a Mortgage Loan Officer and your income and credit report and money available for down payment are entered into the mortgage computer and you get an “Automated Underwriting Approval”, the mortgage is “Approved” to that point.
Yes, an Underwriter must confirm later that the correct information was entered into the computer when the information is compared to income and asset documents and that you did not lose your job and income just before closing.
As long as you give the Mortgage Loan Officer accurate information, and, sometimes documentation to confirm income and assets, the mortgage is “Approved” pending the appraisal and title report that come later.
A Realtor will require a pre-approval before submitting any offer you want to make. You can have this done before you ever meet with a Realtor so that you know the maximum mortgage and purchase price for which you qualify.
From the Sellers point of view, I am sure many believe that they are getting a better offer if they see a pre-approval with a down payment of 20% or more. However, no one tells the Seller what your credit scores are? Is it better to have a buyer with 20% down and credit scores at 620 or 580 or 500, or, is it better to have a Buyer with 5% down and a 760 credit score?
From the Lender point of view, one is not better than the other. What matters is that the lender has an “Automated Underwriting Approval” based on accurate data.
It is the job of the Mortgage Loan Officer and the Realtor to confirm to the Seller that you are a Strong Buyer. The advantage to you with a down payment of 20% or more is that you do not have Private Mortgage Insurance (PMI) which is an additional monthly payment until it ends.
Pre-Approval is FREE. Call or email any time to get it done.
“Automated Underwriting Approval” makes you a strong Buyer no matter the down payment.

John Veenstra
Mortgage Loan Officer, NMLS #178140
41 Grand Avenue, River Edge, NJ 07661
201-833-0123 Ext 278
Cell: 973-809-8786