Re: mortgage pre-approval

Say you are given a pre-approval for a $500K mortgage and you are planning on putting $100K as down payment. Does the preapproval number mean you can actually purchase a $600K home and take up to $500K loan or does that mean you are allowed to purchase a home for no more than $500K?

Re: Re: mortgage pre-approval

The preapproval letter should make it clear. They usually state that you are preapproved for an $x loan assuming a purchase price of x.

So if you are preapproved to buy a house up to $500K and plan to put 20% down, it should say that you are preapproved for a loan of $400K assuming a purchase price of $500K.

A good preapproval will also state the property taxes being assumed ($10K, etc.). If a loan officer is not local, I want to know how much they are assuming in property taxes - - which affects how much you can afford. If the loan officer is preapproving you for a loan of $400K but assuming taxes of $5K, it's probably not going to fly if the taxes are $11K.

Re: Re: mortgage pre-approval

Thank you. I received the pre-approval verbally (he is going to send it to me in writing later) and I didn't feel like calling him back for clarification. Thanks.