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Does a pre-approval letter limit your purchase price, or your Loan amount?

by miguel.r84 from San Francisco, California. Aug 25th 2017 Reply


Your pre-approval letter is simply an estimate of what loan amount you qualify for based off of your information and has not baring on purchase price.

Aug 25th 2017
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Yes usually a pre-approval is your Max Purchase or loan amount.

Aug 25th 2017
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Joe Metzler (JoeMetzler)
#1 ranked lender in Minnesota - 3,553 contributions

A pre-approval tells real estate agents and sellers that you've sat down with a lender, who has reviewed your application and supporting documents, and has said that final loan approval is very strong. It is not a loan guarantee. Typically your Loan Officer will give you a ballpark or maximum purchase price based on you, your wants, needs, and goals. Talk to your actual Loan officer.

Aug 28th 2017
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William J Acres (William_Acres)
#1 ranked lender in Arizona - 8,000 contributions

First understand that there's a difference between a pre qualified and pre approved.. typically, if you are pre approved, this means that all of the information regarding you, your credit and your income have gone to an underwriter, and they have come back with a Maximum loan amount and/or purchase price.. it's based on the documentation you provided.. so if you gave them bank statements showing you had $50K and you are approved for a $200K loan amount, then you would be capped at $250K sales price. Understand that everything changes once you find a home.. Some area's have lower property taxes than others.. some properties have HOA's, others do not.. some are older or have fault lines close by and the insurance is higher.. some area's are in more stable locations and the insurance is lower.. etc, etc, etc.. I'm a preferred Lender with California and Arizona being my primary markets. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com NMLS# 226347 / RPM Mortgage NMLS 1541014 / AZMB0121893

Aug 28th 2017
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