Got pre-approval certificate..have questions!

While i'm awaiting word from lender, I just wanted to see if this was the norm.

I'd love to hear everyone else's viewpoints on this, from personal experience or general mortgage-smarts. (I'm lacking in that department)


They told me the amount I was approved for, obviously, but it also listed the following:

-The max monthly payment is $XXXX.XX (principal, interest, taxes, hazard insurance, mortgage insurance)....I'm assuming this to mean that this is the max amount I can meet a month? (Meaning, I can't pay anything above this amount per month for a home, right?)

-Secondly, if the max monthly payment is set at $XXXX.XX including the insurances, how is this gauged? Is it just a general assumption on the "normal" range of insurances?

-What is hazard insurance? Is that another term for homeowners insurance?

-It states that the monthly real estate taxes are not to exceed XXX a month....so does this mean that I must be at this specific amount or below? Is there a limit on the taxes?


Basically, are these pre-loan terms set in stone, per se, or just a general idea? Are they flexible?

Re: Got pre-approval certificate..have questions!

I am going to try to help!

-The max monthly payment is $XXXX.XX (principal, interest, taxes, hazard insurance, mortgage insurance)....I'm assuming this to mean that this is the max amount I can meet a month?

This the max you really can be in order to survive with all the extra bills etc. I wouldn't go to your max unless their is a raise that will take affect because you will have nothing at the end of the month to save or live off of after bills are paid.

-Secondly, if the max monthly payment is set at $XXXX.XX including the insurances, how is this gauged? Is it just a general assumption on the "normal" range of insurances?

Normal insurance is 1k (around) depending on your house of course. The monthly payment per month is just a generalization it will flux depending on what house you buy, what taxes you have, etc. Sometimes the house is listed at X amount of taxes but once they go to the assessor it can be a higher amount due to discounts.

-What is hazard insurance? Is that another term for homeowners insurance?

YES

-It states that the monthly real estate taxes are not to exceed XXX a month....so does this mean that I must be at this specific amount or below? Is there a limit on the taxes?

They are giving you a guideline to show you do not look at houses at X amount of taxes per year or higher unless the price of the house is lower then what they are telling you can go for. Its a ratio: house price, taxes. if you are approved for 275K and 6K taxes and you find a house that is 12K taxes but is like 200K you are fine.

Basically, are these pre-loan terms set in stone, per se, or just a general idea? Are they flexible?

It is flex because you haven't locked into your interest rate. Depending on the rate you have, the amount your putting down vs the final house cost and taxes will affect your mortgage.

Re: Got pre-approval certificate..have questions!

you are the best!! thanks a million!