Pre-Approval Amount?
After speaking with my lender, they suggested that I only get pre-approved for the amount of the offer I wish to make. I did this, and then found out there was a competing offer. I’d like to now make an offer which is a bit higher than my pre-approval amount. Will showing a pre-approval amount…
After speaking with my lender, they suggested that I only get pre-approved for the amount of the offer I wish to make. I did this, and then found out there was a competing offer. I’d like to now make an offer which is a bit higher than my pre-approval amount.
Will showing a pre-approval amount $18k lower than the offer I am submitting hurt me?
What do people usually do in this situation? We were advised not to get approved for above the asking price as it would hurt us in negotiations.
We are also interested in offering on another property if this one falls through. The other property would be quite a bit more expensive than the current pre-approval amount. The difference between the offer and the pre-approval letter would be $45k.
Do people just get a new pre-approval letter for each property they want to bid on? My lender says no, and that ‘everyone knows’ a pre-approval amount doesn’t necessarily reflect the max of what you can afford – and you can just explain to the sellers agent that you have the savings to cover the difference between your pre-approved amount and the asking price.
Your help please! I don’t want to lose this apartment!
…and by a little over our bid I mean how high we were actually willing to go.
I agree with stnbrkn.
We got a new letter with each offer we submitted. This advice was given to me by the mortgage lender we were working with at Wells Fargo. The reasoning was we didn’t want the seller to know how high we actually could go. I just made sure that the letter covered a little over our bid.
just get pre-approval for your absolute maximum mortgage. we got an approval for an extra $130K then we used.
A mortgage broker told me there is a difference between a pre-approval and a pre-qualification. One is first-level and sort of general, and one is specific to a particular property (?).
Is this correct? I was preapproved for a certain amount, but then he told me I should go on and get pre-qualified, too. Is that necessary?
However, you need to be a bit careful that the pre-approval letter does not show your cards during a negotiation. If you are negotiating against your own price ceiling – and your pre-approval is for 100K more – that information may work to strengthen the sellers position in driving up the sales price.
You should not get a pre-approval for all different amounts. A pre-approval letter indicates to a seller that you are more than financially able to purchase the property. The amount approved does not mean you are willing to spend that amount, it is only to reassure the seller that you are a good buyer. The market value of the property may be $500K for example and you may be pre-approved for a mortgage based on your finances at $600K, that does not make the property worth more. A pre-approval letter is based on your personal finances and not based upon the appraisel of a specific property. One has nothing to do with the other. However, it will hurt you if indeed there is a higher offer and now you want to offer more than your original pre-approval letter said you can afford. That is why you should just have a legitimate pre-approval letter. You want to put your best foot forward when making an offer and you do not want to look like the purchase would be a stretch for you financially.
18k seems more than just “a bit higher”
CMU, you’re correct. pre-approval for max you can afford.
OP, you were given bad advice. if comparable offer price, seller would choose buyer with the higher pre-approval cause seller would think that buyer has higher probability of getting financing and proceed to close.
If a pre-approval id not for a specific property, just an indication of an amount, how could it possibly ‘hurt negotiations?”…you might be looking at a range of properties. I thought you got a pre-approval for the maximum you can afford.
Am I wrong?