"Un-Used" Portions of Qualified Loan Amounts"
A while back, I wrote a post entitled, "I'm Looking for a Few Good ... Questions??" In that post, I asked for some feedback and suggestions from readers as to what THEY would find beneficial for me to address or explain as it pertains to the mortgage business. I received a great response from my post's plea and some pretty great (and timely) questions!
One such question came via ActiveRain member and agent Melissa Zavala, Broadpoint Properties, in Escondido, CA ... North San Diego County. It was a question that she had received as an agent.
The question read ...
"If you're qualified for $200,000 and the home you decide to purchase costs only $165,000 ... what happens to the remaining (or leftover) $35,000 of qualified monies?"
As Melissa pointed out, I'm sure this question has entered the minds of many. Here's the answer ...
In this scenario, the Home Buyer stayed well below their maximum approved mortgage amount of $200,000. What could be considered the "unused" portion of that qualified loan amount ... in this case $35,000 ... is simply left behind and un-tapped by the Borrower. Left behind, leftover, and un-tapped figuratively, not in actual monies.
But I believe, if I can read between the lines, there is actually another "unsaid" question being asked here. That being, "can the Borrower utilize that un-tapped dollar/approved amount for other purposes?"
To address that question ... the answer is "no". The Home Buyer cannot BORROW the un-tapped or unused portion of that approved dollar amount to cover Closing Costs or for home improvements on the newly-purchased property.
All Mortgage Lenders calculate and base their maximum Loan Amounts on the lower of the Sales Price or Appraised Value. That being regardless of any Pre-Approval maximum amount. That maximum Loan Amount will vary depending on the Mortgage Program utilized by the Borrower.
I believe it is commendable that this Home Buyer did not "max" themselves out when considering a home for their new purchase. Doing so can be an especially intelligent decision, when made by First-time Home Buyers that might be unaware of the unexpected costs and monetary demands that arrive with homeownership.
"Un-Used" Portions of Qualified Loan Amounts". I'm hoping that my explanation addressing this topic helped Melissa's client and others that might have been wondering much the same. Should anyone need clarification, please do not hesitate to shout out to me. I'll be happy to clarify and explain more ... and be of service to you.
* Dreaming of Buying or Refinancing a Home in the Lincoln-Way Region, Joliet, Will County, DuPage County, or elsewhere in the Chicagoland area? Contact me today! I'll be happy to put my 36+ years of mortgage experience and expertise hard to work on your behalf immediately.
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