Folks, if I want to buy a house which is about 5% more than the pre approval, what are my options? Let me put it this way, the pre approval was from some lender I got in touch with, if I were to go to my lender (new one, not the one who generated the pre approval) with an actual home sale contract, would they oversee the previous pre approval? Or would they put more effort to ensure I get the loan amount I need because I have a contract with the seller and I am not just window shopping. Thoughts?
As long as you don’t make yourself House poor.
Be wary of risk with appraisal of your property for the loan. Before your lender wires the money to the title company, they would do an appraisal to make sure the property justifies the amount you're paying. If the appraised value is less than what you bought the property for, they will only loan you the appraised value. It doesn't usually happen, but you might not want to push the limits too much.
Thanks, yes.. aware of that... but keeping aside the appraisal aspect of the house, I am trying to understand the margin of error in pre approvals
Different lenders have different risk profiles. Since the difference is only 5%, you should definitely try others. It is very likely you'll find another lender matching your needs. I dont think you should show your current pre approval to prospective lenders. They will do their homework before giving you a pre-approval
Banks generally giving you preapprovals that are idiotically high, partly for their own greed. It’s what caused the 2008 housing collapse. They never changed. Are you sure asking 5% higher is smart? Can you handle any surprises like a totaled car, illness, job loss, etc. what amount did they approve for anyways?
Exactly. I was approved for two times higher than the house I ended up purchasing.
Ok, let me come clean here, I am selling a house and one of the potential buyer’s pre approval is about 3% short of my asking price. And he picked up the ore approval in early January when interest rates were still high. I don’t want to turn him down just based on the pre approval. Sorry, it was easier to post the issue the way I posted it... at least I thought so
And in my defense I did start with “IF” :) Sorry
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Get reapproved at higher or find the cash to make up the difference.
So I assume that if I go to three lenders, I might have three different pre approvals?
The error margin is enough to cover the 5% difference.. is that accurate?