Mortgage Approval Question **ETA

Updated on August 17, 2018
M.6. asks from Woodbridge, NJ
7 answers

As you may recall, we are considering moving to the opposite side of the state we currently live in. I got some great advice from everyone about what we should be looking for insofar as determining whether the area will be a good fit for us. (just a reminder that where MMP says I live is not where I live due to a glitch when I signed up)

I was thinking about getting approval for a mortgage before we go look. We know we are more than qualified for any of the homes we are looking at, and none of the places we are looking at require pre-approval. My concern is that I don't want to tip my hand as to how much we ARE approved for. We are planning on offering $50k on the one house that is really close to my potential office and even if we decide against that one, none of the houses we are looking at are over $75k. Our approval letter will show that we are approved for probably $400 - $600K? We don't really have any debt, have our current home paid for, and make pretty decent money having been at our jobs for 10 and 20 years each. Our last pre-approval letter nearly 20 years ago was for over $300k and we made less then and had more kids and obligations so I figure it would be more now.

Thoughts on how we can kind of have it both ways? A pre-approval letter, by definition, says the amount you are pre-qualified up to, but I don't want that really big number shown to the potential seller or their real estate agent. My agent doesn't need it or care. I'm just trying to enhance our bargaining power . . .

Thoughts? It's been a really long time since I've had to deal with mortgage issues, maybe its a whole new world out there!

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So What Happened?

Really great suggestions! I hadn't even thought about the possibility of taking a mortgage out on this place for the new place, which if we rent this place, makes a whole lot of sense for tax reasons.

We made some choices a number of years ago when we were living in an area that the median home prices were close to $500k (and this was over 10 years ago!). If we were willing to make some sacrifices, we could move within the same state and own our home free and clear. We purchased our current home for $40k over 10 years ago. We live in a small rural town, my husband has to drive 1 hr to work each way (but in all fairness, he drove an hour each way with traffic before, even though it was only like 18 miles), I've worked as a remote employee and it was overall a huge lifestyle change for us. The up sides were we own our home free and clear, our last 4 kids grew up in an area where there is relatively little crime (and what there is is just petty crime), and it is a real thing here to come home when the street lights come on. Our pocketbooks, retirement accounts, and savings accounts definitely reflect the fact that our cost of living is extremely cheap but we both work professional income jobs. For us, it was the right choice :)

Oh, and we don't live in a "tiny house" - which I think some of those even cost more than our current house! Our current house is 4 bed/2 bath/1 car garage. The house we are looking at is 3 bed/1bath/2 car garage w/fenced yard on a huge corner lot. The new/potential house is actually in a fairly large town next to a fairly large city so it will be nice to have access to shops and restaurants that we have been missing for the last 10 years just a 15 minute drive away!

More Answers


answers from Washington DC on

Being pre-approved is a "nice" thing to have. We are selling my dad's home since he died in March. We have told our real estate agent that EVERYONE who puts an offer in MUST be pre-approved. We are NOT looking at how much they are pre-approved for - but that they ARE approved. It can cut down escrow as well.

To see someone write $50K for a house. I think of a "tiny house" on wheels. Not a STATIONARY home. LOL!! Homes in our area aren't even close to $50K - more like $500K to $2M. What a difference.

Also - you can change your name and location. Just go to your profile and edit/update.

You also can ask your mortgage lender to give you a letter stating you have been pre-approved and not give the amount. Since your house is paid for? Have you considered taking a 2nd out on it and offering cash for the house? That would make things move faster as well.

I get what you are trying to do. But really - even if you were pre-approved for $600K - the mortgage company will NOT give you MORE than the house is appraised for. ANY real estate agent knows that. Your agent just needs to tell the buying agent that you are pre-approved and ready to make an offer.

Good luck!

7 moms found this helpful


answers from Norfolk on

Just because you've been approved for a given amount doesn't mean you HAVE to spend that amount.
All a pre-approval really does - as I understand it - is to give YOU an idea of the price range you can afford (no point at looking at places out of your price range), and it speeds things up when you've found a house you want (you don't have to apply and possibly get turned down).
As far as I know - no one needs to know anything about a pre-approval - just the knowledge gives you some power/confidence.

That being said - sometimes they approve you for a very high amount - too high to feel comfortable with.
So choose a home where the mortgage payments will not be a hardship to deal with on a month to month basis.
Keep an emergency fund in reserve.
And if you're moving - the money from the sale of your old home will offset what you need for the new place.
If you're keeping your old home - rent it out so the rent from home 1 will go to help pay mortgage on home 2.
If you do rent it out, get a management company to manage your rental property - being 5 hours away you can't really take care of it.

4 moms found this helpful


answers from Wausau on

Your current pre-approval is generic, but you can ask your lender for a letter that is specific to a property or with an adjusted-down amount in general. If all of the things you're interested in are $75k and under, ask for a letter approving $100k, for example.

Not all properties will require a pre-approval letter at the time of an offer. We had pre-approval but never had to show the letter.

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answers from Chicago on

The pre-approval only says the amount you want to be approved for. I specifically said I wanted to only be approved for up to X amount. Mind you I was dealing with my credit union, but still. If you only want to buy a 400 house, then get approved for the amount of mortgage you want to have (or just do a HELOC, pay cash for the new house and go from there).

I didn't ask how much we could be approved for, I told them the amount I wanted on the letter. We bought a home that was about 35% of what we could have purchased. Our realtor asked us our upper limits. I told him the amount I felt comfortable spending. he figure out quickly we could buy a lot more than we were looking at, and I just gently nudged him in the direction of houses we actually were willing to buy.

I had our credit union give me letters specific to each property, directly for the asking amount.

btw, I ended up using It's on online mortgage company that got the mortgage done in 22 days and gave us an amazing interest rate. Highly commend them.

3 moms found this helpful


answers from Washington DC on

what you're pre-approved for has nothing to do with the price of the house or your offer. it makes life easier in the long run. i was in the mortgage industry for a long time (although it was years ago) and i've never ever known an agent or lender go 'they're approved for more- make them offer more!'

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answers from Boston on

I see what you're saying and understand your thoughts on bargaining power. I'll offer you a different perspective and encourage you to talk to a realtor, who really knows the ins and outs of your market. When I was selling my house, the most attractive offer, and the one we accepted, was from an investor who was paying cash. Obviously they had the means to purchase the house and had deep enough pockets where price wasn't an issue. But they still knew a good value and wouldn't have paid more than the house is worth. They weren't desperate and would have walked away from a deal that wasn't fair. Their offer wasn't the highest, but we declined a higher offer because that buyer's financing looked iffy. It's not like in a seller's market like the current one that a seller is going to lower the price out of sympathy for a buyer with a limited budget. Having no issues with finances will make you a more attractive buyer for someone who wants to sell and not have to worry about the buyer's finances falling through.

All that said, I don't recall getting any detail from prospective buyers about their pre-approval amounts, just that my realtor wasn't entertaining offers from anyone who wasn't pre-approved.

Given the huge difference between your means and your target price range (and can I say that I can't imagine buying a house for that range? That's down payment range where I live...I'm jealous of your options!), you can have the letter read something more in line with your target, like $100k.

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answers from Philadelphia on

When we sold our house the realtor told us to accept the offer because it was just below asking price and the buyer made $x amount. It never dawned on us to reject her offer since she made so much. Conversely, we qualified to purchase a home almost double the price of the one we are in. Like you, we were unwilling to do so. That is what gave us our bargaining chip. We didn’t need the house and we could walk away. We ended up buying new construction so there really wasn’t any bargaining.

1 mom found this helpful
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