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Going Beyond the Approval Limits

One of the goals of getting pre-approved for a mortgage loan is to help determine how much home you can qualify to buy. In the best situation your lender will go beyond a pre-approval and seek to provide you with an automated approval.

An automated approval uses the major underwriting systems in the mortgage industry to determine a yes or no for a mortgage application. If the system says yes, it will list the requirements needed to get the loan closed. This is great because the job of an underwriter is to simply check off the boxes. The yes or no has already been done. Now its a matter of making sure the lender is getting the required documentation in order to fulfill the approval.

If the automated system says no, then a mortgage application would need to be submitted for a “manual decision.” With a Manual Underwiting decision, the underwriter has to make the yes or no decision. And since the automated system said no, the manual underwriter will be more on guard. After all, there was a reason the loan was declined… so what is being submitted to prove that the automated system is wrong? Well, that is the job of your lender.

With all this being said, a common question is “can we get more?” In other words, a potential buyer is approved using the automated system up to a certain dollar amount, but wants to know if they can exceed that number when looking for a home. Maybe the approval limit is lower than they hoped. Or maybe there are a couple homes that are just a bit above the approval. Either way, the question is can they go bigger?

If your pre-approval is from the Carolina Mortgage Connection, and it was based on an automated approval, the answer is…. maybe, but proceed with caution! If I could not get an automated approval for the dollar amount you need, we can certainly seek a manual approval. but be aware that this can take a bit longer, there is a greater chance of being declined (and getting frustrated) and in some cases (such as FHA) you could be disqualified to apply again for up to 6 months. Personally, I advise against going for a manual approval when you have an automated one. Why make things more difficult? But if you just can’t find a suitable home within the approval limits and have truly exhausted all options, a manual submission may just work.