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Pre- Approval

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  • #1

    Pre- Approval

    Hello everyone,

    For anyone that has knowledge with pre approval.

    When applying for a pre approval, Do they approve you for the maximum amount base on how much you have down at the time of applying plus all of the other pre requirements or do they just approval the maximum base on debt to income etc.. regardless of how much you have down at that time?
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  • #2
    Originally posted by thomasdan View Post
    When applying for a pre approval, Do they approve you for the maximum amount base on how much you have down at the time of applying plus all of the other pre requirements or do they just approval the maximum base on debt to income etc.. regardless of how much you have down at that time?
    I'm not 100% sure but I don't think they care how much you have to put down. That doesn't affect how much you can afford to borrow.

    Please don't let the lender determine how much you borrow though. They will typically pre-approve you for way too much. Run the numbers yourself. Make sure your housing costs will not exceed 28% of income and preferably less than that. They will give you a pre-approval number that sounds great unless you'd also like to have a life after you buy the house. Keep that in mind. You don't want to end up house poor.
    Steve

    * Despite the high cost of living, it remains very popular.
    * Why should I pay for my daughter's education when she already knows everything?
    * There are no shortcuts to anywhere worth going.

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    • #3
      My wife and I already know how much we can afford for our house to still live comfortable. Even though we can afford more. We do not want to be house poor.We will let our lender know exactly what we want. Thanks for your quick response DS.

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      • #4
        It is good to note that you do not want to be house poor. Even if the lender approves you for a higher loan amount, it will be your discretion and you can go for a home which you think will be good for you. It is not mandatory to take out a loan of the amount pre-approved by the lender.

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        • #5
          Originally posted by thomasdan View Post
          My wife and I already know how much we can afford for our house to still live comfortable. Even though we can afford more. We do not want to be house poor.
          It sounds like you're on the right track. Get the pre-approval but don't be surprised when it is a ridiculously high number.

          Our pre-approval was for $159,000. We actually borrowed $113,600. There is no possible way we could have gotten by had we borrowed 159K.
          Steve

          * Despite the high cost of living, it remains very popular.
          * Why should I pay for my daughter's education when she already knows everything?
          * There are no shortcuts to anywhere worth going.

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          • #6
            lets say for example the lender approves maximum of $200,000 but we only need $150,000

            does the lender write up the pre approval for $200,000 or do we tell the lender we only want $150,000 to be written on the document?

            we dont want the seller or seller agent to know we can afford $200,000 so they think they can hike up the house value during negotiation knowing that we got approve higher than $150,000

            This is all a new process for us, we have done some research but would like to know some tips from previous experiece members on this forum before we go see our lender again. just so we dont get caught of guard.

            Thanks again

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            • #7
              I too was dumbfounded by the sum approved for a mortgage. It's more important to keep your real estate agent focussed on the price range in your comfort zone as it's been my observation that they inch clients upward. I hope you're looking on-line at homes for sale in the area you've chosen. They offer virtual tours with details to compare and contrast elements to help you identify 'must haves.' Keep in mind that this operation is nearly pure capitalism. The seller is free to ask whatever they feel their home is worth based on emotion. Their real estate lister will do their best to offer guidance based on 'Sells' in the past 3-6 months.

              A buyer is free to offer whatever they believe the home they want to purchase is worth to them. The buyer can ask for anything they see in the house over and above items already listed like appliances and items attached to the wall, not specifically precluded other than 'personal' effects. Buyers who allow themselves to becomes emotionally attached to a specific home often offer more than the asking price to ensure they are the chosen buyer. Realtors who are paid by commission adore bidding wars.

              I thought the most important factor was getting the best/most qualified [recommended] Home Inspector to check all the mechanicals since those make the difference between happy house and money pit. If possible check out the builder with the Better Business Bureau who have decades of records.

              ...sorry this is probably more than you asked

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