https://www.youtube.com/watch?v=HBAnewpknQM&list=WL&index=69
Today we're going to be talking about why getting Max qualified when you're buying a house is more dangerous than ever. So if you're new to the channel, I'm a mortgage lender licensed in 48 states. I do a lot of work with first-time home buyers, second time, third time, you name it, I'm there for it. I wanted to do this video because I'm noticing a trend, and whenever I see a trend, I definitely want to make sure you guys are aware of it.
What is Max Qualifying: So first of all, if you're new to the channel, what is Max qualifying? Max qualifying is when a lender qualifies you for the highest amount that they can get approved. And the reason that's dangerous is because you're like, "Well, they can get it approved, it's okay." Guys, the stuff we can get approved can bankrupt you. That's what you need to know. Like with a conventional loan, generally the debt to income, and I've got videos on that, is going to cap out at 50%. FHA and VA, you can hit 60%, and VA sometimes you can go over 60%.
Understanding Debt to Income Ratios: So what does that mean? If I'm saying, "Hey, your debt to income is 60%," what that means is that your new mortgage payment (principal, interest, taxes, insurance, HOA if there is one) plus what's on your credit report (just the minimum payments, guys, just the minimum payments) is 60% of your gross income. Gross is before they take out taxes. Yeah, so like in certain states, after they take everything out, you could have like $5 left. It's not a good thing. It's why you always want to make sure that the lender is telling you what to expect with the payment, and then you're doing a budget.
Current Concerns with Max Qualifying: Okay, now you're like, "Great, okay, cool, why are you so worried now?" Well, look, I've been worried for a long time about Max qualifying. If you guys watch my story, you know this. It's worse now. Here's why: insurance. Insurance and, if you're buying a condo, HOAs. Insurance across the country has been going up for the last few years. I've been doing this for over 15 years, and the last three have been the worst with insurance across the country.
Rising Insurance Costs: A lot of times I'll hear people go, "Well, my other house, because maybe they already own a house, that's $50 a month." And I'm like, "Yeah, your new house is not going to be that." They're like, "But it's newer." I'm like, "Trust me." And then they get a quote and they're like, "Whoa, it's like $2,400 a year." And I'm like, "Yeah, welcome to 2024." Insurance across the country is going up, and you may be like, "Well, Jen, I got an insurance quote, everything's fine, the payment's at the top, but I can do it." Guys, we're seeing insurance companies raise premiums. There are certain states like Florida that springs to mind where it's not uncommon for insurance to go up 30-40% a year. It just depends on what's going on.
Insurance Company Inspections: Also, what can happen with insurance is you can be closing, you can close on the house, great, the insurance company may drive by and do an inspection of your property. They may determine that they want to charge you more. Insurance is a real issue in America right now regardless of where you live. Because you may be like, "Well, Jen, nothing happens where I live." That's fine, you're paying for the rest of the country. It's true, it's true. There are certain states like, I mean, look, you got Tornado Alley. Louisiana is surprisingly expensive, but then when you start thinking of all the stuff that's happened, you're like, makes sense. You know, it is an expensive thing and it keeps on going up. So you don't want to be at the top and then get an increase in insurance and not be able to buy your house, stay in your house, sorry guys.
Condos and HOA Fees: So then let's talk about condos. Look, condos, I really, really will try to talk someone out of going near the top. And the reason is, people are like, "Well, the HOAs are $500." Great, they could go up to $700 next year, and you have no control, none, none. So if you're buying a house or if you're buying a condo, I really want to urge you right now, do not Max qualify.
Safe Debt to Income Ratios: Okay, so look, what is a safe debt to income? Because people ask me that every day, and I'm going to say this: it depends on your spending. Some people are very frugal and they can handle a higher debt to income, whereas other people can't. You know, there's some people who make half a million dollars a year and have nothing in savings and $200,000 in credit cards. It depends on your spending. So when you're looking at a house, what I urge you to do, please, is do a budget. Ask your lender for what your total estimated payment is for taxes and insurance. Make sure you're getting your own quotes. For taxes, look it up on the property tax website. For insurance, get a couple of quotes because there are some lenders that put, I call them fairy tale numbers because they're never going to happen. You're not going to get homeowners insurance for $27 a month. It's not a thing. You know, so have realistic numbers, do your budget, and look at the payment. And if you're like, "I could handle it if it went up a couple of hundred bucks," great. If you can't, you need to dial down how much you're qualified for because the last thing you want to do is get those keys, get home, and then not be able to afford it.
Conclusion: So look, I hope this video was helpful. Questions, comments, always reach out. And yeah, I have the link to the calendar. Remember, I have Sandy and Alyssa. Their entire job is just to answer any question you have. You don't have to have an application with us for them to answer your questions. They'll do it to the best of their ability. You know, sometimes people call us and they're like, "How can I commit fraud?" Yeah, we're not going to help you with that. Or, "My lender is doing this, does this seem right?" I mean, we can't always tell, but you know, your home buying questions, we're here to help, how to plan, stuff to think about. But really, don't Max qualify right now. Okay, thanks for watching.
The speaker urges potential buyers not to Max qualify due to the rising costs of insurance and HOA fees. Proper budgeting and realistic financial planning are crucial to avoid future financial strain. The speaker and their team are available to answer any home buying questions, emphasizing the importance of being well-informed and prepared.