When submitting an offer...

If you tell the realtor what you've been pre-approved for and how much of a down payment you're putting, aren't you showing them pretty much how high you can go? Basically, how does letting the agent know your approved mortgage and down payment info benefit you when making an offer?

Re: When submitting an offer...

when you speak to your mtg advisor or whoever you are dealing with, ask for a pre-approval showing your offer amount. not the total. if you make a counter, usually they dont ask for an updated pre-approval (sometimes they do) and then you have to get a new one from the mortgage company. it is a little bit of a pain but you are right, its not to your advantage to let them know exactly how much you have to put down and how much you are pre-app for.

Re: When submitting an offer...

We told them how much we are putting down and showed them our pre approval letter. Even though we were approved much higher then what we bid on the house for, our mortgage company gave us a letter with the offer we presented. So it "showed" we couldn't go higher. Luckily it all worked out.

Re: When submitting an offer...

Thank you. I think we kind of screwed up. Ugh. Rookie mistake. Lesson learned.

Re: When submitting an offer...

I agree that if there is a big disaparity between what you are preapproved for and what you are offering (e.g., you are offering $320K on a house listed at $349K, but are preapproved for $450K), it's a good idea to get a preapproval letter more in line with the asking price of the house.

Also, at the outset, you can always ask your mortgage lender to put a specific number on your letter that is in line with what you want to spend. When I bought my house, we wanted to spend about half of what we could be preapproved for, so we got a letter with the number that we targeted as our budget on there.

But I think if you are working with a realtor, you should be honest with the realtor about how high you could go if you found the perfrect house. If I know someone's entire situation, and they are upfront with me, I can assist them better. Realtors are working to get the sale done, which is usually in everyone's benefit (you want a house, the sellers want to sell the house). If I know someone is preapproved for $500K but gets a letter saying they are preappoved for $400K, I don't disclose that they are preapproved for $500K when making the offer. It's irrelevant. Just because a buyer COULD spend more doesn't mean they are willing to on a particular house.

Also, your agent needs to provide a preapproval and discuss your downpayment when making an offer on your behalf. The seller (and the listing agent) will ask. It can help you -- If I am the listing agent and have 2 offers on my listing, I am more likely to advise my seller to go with the one that appears more financially solid (i.e., bigger down payment and can comfortably afford the home, versus someone who appears to be going to the max of what they can afford, since a preappovoal is not a solid commitment).

Re: When submitting an offer...

Thanks Christine! You're always so helpful. I feel much better now.