How to make an offer in this case?

Question

If a property is listed for $450K, I'm pre-approved for $410K, but I do have a HELOC ($140K) to utilized and cover both the DP and the $40K difference, how should I put it on the offer?  Would the mortgage company have any reasons to go against this offer and not giving me the mortgage?  Thank you!

Marcus Auerbach · Answer

@Amily Yi-Chieh Tseng talk to your lender, your PA is probably not max. You need a PA to cover the full offer price to be taken seriously by the seller. If you work with a random lender, national big box bank etc ask your agent for a local lender.

Marcus Auerbach · Answer

You should really interview a few lenders! Its not about what they like to hear, it's just different loan products. Loans are the products a bank is selling. You have to decide what product you want to buy, or have them explain the different products to you. If you live there it is an owner occupied loan, they are usually favorable over commercial loans, which have shorter terms and higher rates. But it is worth to discuss.

The person you speak with is the loan officer, you can be fully open and transparent with a LO. The LO will help you pick the right product and then pitch it to the underwriter. You will never meet the underwriter and the LO will decide which information to present.

Amily Yi-Chieh Tseng · Answer

@Marcus Auerbach

Thank you so much.  This is very helpful.  I’ll definitely talk to the Lo and shop around more too.

Amily Yi-Chieh Tseng · Answer

@Marcus Auerbach great advise.

Thanks everyone.

One more follow up question.  We actually plan to use this property for business purpose and we will/can (if needed) live in there.  Does lenders like to hear that we can actually generate income using the house?  Or they discourage that?  Thank you.

Jonathan Greene · Answer

I don't think it will work that way. As others said, your use of a HELOC will adjust your qualification status for the underlying loan.

Marc Winter · Answer

Your lender might disqualify you if you borrowed the downpayment by tapping a heloc; it would throw your qualifying numbers off.  If you don't have proof of funds, you have a diminished chance of actually closing the loan.

Wayne Brooks · Answer

It’s simple....your contract would list whatever Loan Amount you’re approved for as the amount to be financed, in the financing contingency, and the balance is how much cash you are putting down.

How to make an offer in this case?

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