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I was Pre Approved to be able to make an offer on a condo recently

but was outbid and didn't get the condo. So my search continues. The pre approval amount was only for the asking price of that particular condo. It was a foreclosure so I didn't have an issue with offering the selling banks asking price.

I just emailed the bank who pre approved me and am sure they will let me know, but based on my income I know I can afford a home bit more. Since the home I bid on was a foreclosure it was a good price and other similar homes in the area are going for 20-30k + more.

So will the lending bank just send me another letter of pre approval stating the maximum amount I can borrow from them to continue my search? Again the pre approval letter I received was only for the amount of the condo I lost out on. Or do I have to do all of the paperwork, etc. all over again if I bid on another home?

Sorry I know this is probably obvious but I am a first time home buyer and that was the first offer I had made so just looking to become clear on the pre approval process to make future offers.

Thanks!
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May 07 2012 - Chicago
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Answers (8)

Hi Theresa,

Ask your lender to give you one "generic" pre approval letter, this way you do not need to ask for a new one each time you submit an offer on a home.

Ask him the expiration date (usually 30-90 days) so that you personally are aware.

Good luck!

P.S. If you need a good buyers agent feel free to contact me directly.
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May 08 2012

Theresa, here is why you should find a good local agent whom you like and trust. If you had one while making your offer on the bank foreclosure, an exeperienced agent could have advised you to offer more than the listing price. I bet the buyer who won the bid did just that and still is ahead of the market... If you had a realtor working for you, he/she would have been in communication with your bank/mortgage broker. If you have been pre-qualified for more than the amount you used to submit your 1st offer, you do not need to go through the process again. Best of luck to you.

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May 07 2012
You do not need to get approved each time you ask for an approval letter. The approval letter you will get has an expiratopn date beyond which you may need to update some of the info you have the lender. That date is usually 90 days.

Some buyers like to ask for an aproval letter that is just for what they offer. The downside to that is if you need to counter offer then you need to get another letter for the higher amount.

Some buyers like to get an approval letter for the maximum they can afford to show the other side that they are very qualified.

It is not easy for a 1st time buyer to find their property alone. My web site shows you about my Buyer Rebate and my business. It also has some lender references in case you want to show around and some attorney's in case yo want to do this by yourself. Be sire to show all the papers to your attorney before you sign anything. 
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May 07 2012
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I am in no way looking to borrow beyond my means or max out the lenders approval offer. I was just trying to state that the foreclosed home was being sold below market value. Some of the other listings I am now interested in that are comparable to the home I lost out on are about 20k more. Which with my income and low debt I think I would be approved for, but I have to wait for the lender to tell me that for sure I know.
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May 07 2012
I agree that you should have a good buyer's Realtor to assist you.  That agent can coordinate with your mortgage person to get the pre-approval letter as appropriate for whatever home you might purchase (assuming you qualify for at least that amount).  It isn't always good to provide a high pre-qualification amount on an offer for a less expensive home and all that is needed is that the buyer be pre-qualified for the amount that is being offered. 

I also caution though that you not just go out and spend as much as you may be qualified for.  You need to be careful that you are comfortable with the payment yourself.  The lender guidelines may be close to predicting affordability, but everyone is different and you will not be happy with your new home if it is a constant struggle to pay the mortgage.

Good luck and Best wishes at this exciting time! 
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May 07 2012
I usually send different approval letters. I send one to the buyer based on the highest amount they qualify for, with the property listed as "to be determined".

Then once my client is ready to write an offer, I send a new one to the agent for the price they are offering for the home and including the property address.

Every agent has their own style. Some agents don't want the seller to know the buyers are approved for $300,000 if they are only offering $250,000. They fear that the seller will see that the buyer can qualify for more and counter to a higher price.

Some agents want the seller to know that the buyer can easily qualify and are buying well below their ability.

You should discuss this with your agent and decide which option works best for you.   You lender should be getting you approved for the highest amount from the very start. It is easier to get preaproved for $300,000 and then lower the amount to $250,000.  
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May 07 2012
Theresa913,

First I would like to say congratulation on taking the first step to becoming a homeowner.  It is always exciting and will come with some challenges.  With that said, I would like to offer you some help on the pre-approval you have received.   If you have a pre-qualification approval then this should be easy to change.  The lender who sent this took the time out to receive your information and determine your affordability without underwriting.  The pre-approval you want is the "Underwritten Pre-Approval."  This is when the bank takes all your information, (credit, W2/Tax Returns, Income, etc.) and underwrites your loan based on if you had a property ready to go.  Banks such has Bank of America have programs called "Buyer Ready" where they underwrite your loan and offer you a pre-approval letter with conditions. (This is not an endorsement for Bank of America.  lol) The only condition necessary in this case is to find a qualified property.

If you have an underwritten pre-approval, it will be necessary for the bank to make you sign more papers.  If you have a qualified pre-approval, you will not need to provide paper work.  I hope this helps.  :)
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May 07 2012
Get a good buyers agent! This way you have someone to walk you through the whole process, at no cost to you. Interview two or three agents and go with the agent you mesh best with. Then next time you wont get out bid! :)
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May 07 2012
 
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