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Pre-Approval Letters and Offers

pre-approve offerYou’ve contacted your mortgage lender and have been pre-approved for a loan. You’ve been searching for a houses within your price range, and you are now ready to make an offer on a house. Should you present your pre-approval letter to the sellers along with you offer? Let’s take a look at the pros and cons of doing so.

PRO: The seller takes your offer seriously

If a seller receives an offer on their home without a pre-approval letter, it is possible that they won’t entertain the offer at all. They may entertain the offer but not feel as secure about the it and try to see if other offers come in. Seller’s may be wary of whether or will be able

PRO: Can help your offer stand out against competition.

In a competitive real estate market you may be presenting an offer at the same time as 5 other buyers. If you include a pre-approval letter it can help you stand out from the other competition. Without a pre-approval letter it is likely that the sellers will toss your offer out immediately.

CON: The pre-approval letter includes a loan amount.

When it comes time to negotiating on a home you don’t want the sellers to see the entire loan amount you are pre-approved for. If you are offering a sales price of $250,000 you don’t want the seller to know that you are pre-approved for $300,000. This will entice the sellers to counter-offer at a higher amount.  Most lenders will provide you with a pre-approval letter that has the offer amount listed on it. Contact your lender to see if they offer this feature.

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