The difference between your current monthly payment and the new payment
Shock Value is the difference between what you are currently paying for rent or housing and the new principal, interests, taxes, and insurance (PITI) payment. For example, if you are currently paying $1.000 a month for housing and your new payment is $1,400, your shock value is $400. Would you be able to handle the difference? The goal is to assure the lender that you can handle the higher payments.
Although your debt ratio is within established guidelines, MSV or Mortgage Shock Value may be a greater issue if you do not have a mortgage history. If you have been pre-qualified for a mortgage, you should have a good idea of your monthly payments. In this case, try putting the MSV into a savings account for six months prior to buying your new home. For example, if the difference between your current and future housing payments is $400, deposit that amount each month to show your future lender that you can financially handle the higher monthly housing costs.
While MSV is rarely mentioned, it is one of the best compensating factors when a lender is hedging whether to approve your application.
