Preapproval amount reduced because of hoa fee (insurance, loan officer, real estate)
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I was approved for a VA Mortgage. My plan is to buy a small Condo in a AZ Retirement Community. The Mortgage Company assigned me a RE Agent for the locale Im looking at. I can also choose my own agent if I want, so I'm not forced to use the agent assigned. Benefit is they are trained with the VA process.
What has happened is No one at all informed me the Mortgage amount drops if there is an HOA. Mine dropped $40.000. It was clear from the start Its a Condo in a Retirement Community. That was all I would be buying. So the Mortgage people cannot play dumb on this one. HOA fees come with that type purchase. When I went to inquire about the 1 bed Condo I planned to purchase is when I was told this info. So I wasted time and money looking at homes all in vain. When such a major aspect of this purchase would involve HOA. I think both the Mortgage people, and the RE Agent should have spoke about this when I was approved. When I notified the RE Agent about this, she said she didn't know a mortgage is reduced because of HOA Fees. Truthfully I find that hard to believe, unless it was her first day on the job. So I don't know if I have poorly trained Mortgage employees, and RE Agent as well. I just know I want a Condo, I have been approved. I expect to use this VA benefit and will fight to use it. Plus I need employees that know or care about what they are doing. To top this off I was putting my home in Fla up for sale yesterday, Now that had to be canx until this mess gets rectified.
How do I deal with the Mortgage Company, since they leave important info out on this type purchase? I fear I will notice a pattern of this with them even at closing. They are rated number 1 for VA Mortgages. So far I'm not seeing it. In fact I got a UPS Package from them. I thought it was info on my approval. It was a pair of green socks as a gift for selecting them for my mortgage. I thought you have got to be kidding, Some damn socks. Everything is online with them. They are very impersonal I've noticed, hence poor communication on the HOA FEES. Should I get a new RE Agent, and basically. ask for a different Loan Officer, that is more forthcoming with their policies. I don't want to make waves, but this is not very fair to me. The lack of professionalism and appropriate info to buy a Condo. I already did complain to the Mortgage Company business office. Someone is suppose to call me this week about this. They did apologize but I don't know.
Need some advice from anyone that has some. Thanks
I am sorry you're going through this, but before you come down too hard on everyone else for not telling you, it should be common sense for you too, that any new monthly expense needs to be figured in to the overall budget.
You probably need to think about these things not in terms of the overall amount, but your monthly payment. Find out what your max approved monthly payment is. If you have a max monthly payment amount of $_______ and there is an HOA fee that will have to be paid every month, that will need to be considered in that max, as will your taxes and insurance and other commitments. Figure out what the total will be for a place before you get too far in the process, and eliminate those with really high HOA fees unless the purchase price is much lower!
Your mortgage company will probably want to collect and pay the HOA fees, insurance and taxes each month in your payment, and pay these directly, to make sure it's done. They do NOT want to end up with an HOA that is foreclosing on a house for nonpayment of HOA dues.
I will say if you're using a big national bank, you will very likely get MUCH better service from a local independent mortgage broker or lender. Many can do VA loans and will give you much more personal service. I will never again use a big bank with an automated answering system. I have mobile numbers for the lenders I use, that can reach them directly any time of day or weekends.
I am sorry you're going through this, but before you come down too hard on everyone else for not telling you, it should be common sense for you too, that any new monthly expense needs to be figured in to the overall budget.
You probably need to think about these things not in terms of the overall amount, but your monthly payment. Find out what your max approved monthly payment is. If you have a max monthly payment amount of $_______ and there is an HOA fee that will have to be paid every month, that will need to be considered in that max, as will your taxes and insurance and other commitments. Figure out what the total will be for a place before you get too far in the process, and eliminate those with really high HOA fees unless the purchase price is much lower!
Your mortgage company will probably want to collect and pay the HOA fees, insurance and taxes each month in your payment, and pay these directly, to make sure it's done. They do NOT want to end up with an HOA that is foreclosing on a house for nonpayment of HOA dues.
If I understand it correctly a recurring expense (like the HOA fee) would be regarded as a debt, just as property tax and insurance would be, regardless whether you pay those yourself or through the mortgage. The fee will raise your DTI ratio. The higher your DTI, the less money they'll loan you. The lower the HOA fee (and consequently the lower your DTI) the more they'll loan. Some ballpark pre-approval will start shifting once they know the specific condo you're considering buying.
Last edited by Parnassia; 08-18-2019 at 01:39 PM..
You are approved for a VA mortgage but are you "pre-approved" for a certain purchase amount?
Are condo fees and taxes usually deducted from the pre-approved monthly/annual payments on a pre-approval?
I think the OP has a reasonable complaint if the VA real estate agent was also uninformed about condo fees because they certainly are an ongoing monthly expense, just like taxes and insurance.
Did you list the HOA fee as a monthly expense on your loan application?
If you didn't, then your problem is on you.
What you think people "know" is irrelevant. It's what's on paper that counts.
How can you do that when you may not know what it is and it's not a current expense ?
I remember years ago I got preapproval before I went looking and don't recall them asking about "what if possible future expenses". I got preapproved on what I currently had including expenses.
A pre-approval is not a commitment to lend, so you were not "approved" for a VA loan. You were preapproved based on the info you gave the loan officer regarding income and debts (debt-to-income ratio = DTI). The LO likely estimated for your taxes and insurance but omitted HOA fees in the equation. Before getting all upset, you may want to talk to another VA lender, someone you can reach on the phone and will return your calls. The way I see it, you probably have a couple options.
~If you are only missing qualifying by $40 a month, is there a debt you can pay off? Maybe a credit card or two?
~Can you buy your rate down so as to lower your monthly principal and interest?
~Do you know your lender's restriction on DTI for VA? Some lenders have a max DTI amount (their overlay), while some have no max amount. It's possible you may qualify with a slightly higher DTI.
Thank you for the replies. The Veteran Mortgage Company called today. They are open 24/7. I was told this should have been explained, when I received the approval amount. Unfortunately they don't send letters, they only email the approval amount. So you have no explanation about anything. They also rarely deal with Condos, so the Loan Officer failed to even think about HOAs. The reason they rarely deal with Condos, is their Clientelle is people on Active duty. Or younger non retirees buying single family Homes without HOAs. So they apologized for the oversight. I actually suspected this when talking to them . As I had called prior to go over my monthly payment. At that time I had no idea what the HOA fee would be. I felt it was my added expense beyond the Mortgage payment. Just as where I live now. Their very nice but its like dealing with young college age kids. It sounds like a busy call center. This company only writes VA loans, and supposedly its employees are mainly Veterans. So I don't know. Either or I'm finding my own RE Agent, one I assign to me not them. One that knows the particulars and shows me homes I'm actually going to be able to buy. IVE had to eliminate Sun City because of this, The lowering of the mortgage amount and the many fees at Sun City make living there impossible. That's ok though something else will come up.
So this is definitely an experience. I think I probably should have went with Navy Federal Credit Union. As I'm more familiar with them, but this company is rated higher for VA Loans. My fear now is since Condos are not their usual transaction. I may very well find none of the Condos I am shown will be approved by them. Im trying to be positive about that thought. See how it goes with them, or I will have to get a Mortgage thru another VA Lender. Thanks Again
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