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Should I offer more than my preapproval for a home

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Contributed by : Jayshree Reddy
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Should you offer more or less than your preapproval for a home? I have worked with first time buyers who have their preapproval but struggle with what the list price they should be looking at for a home they want to purchase.
This article answers a common home-buying question: Can I offer more than my pre-approval amount when buying a house?
Can I Offer More Than My Pre-Approval on a Home Purchase?
"Can I offer more than my pre-approval amount on a house I want to buy?"
This is a common question among home buyers, especially those who have never been through the process before. The short answer is yes, you could certainly offer more on a house than what you've been pre-approved for. But you'll have to pay the difference between the loan amount and the purchase price out of your own pocket. Do you have reserves that you can show the seller? Apart from what is mentioned in your pre-approval letter.
Here's how it unfolds: The home buyers go to their mortgage lender to get pre-approved for a specific loan amount. Then they start the house-hunting process and find a home they want to buy. The house costs more than their mortgage pre-approval amount.
As a buyer, you have several options in this scenario:
You could add cash to your down payment to cover the difference between your loan amount and the purchase price if you can afford to do so.
You could find another home to purchase, one that is priced closer to your loan amount.
You could ask your loan officer if you qualify for a larger mortgage size, to get you closer to the purchase price of the house you want.
How you proceed will depend on your budget, the amount of money you have in the bank.
When the House Costs More Than the Pre-Approval
Here is what you need to know about the pre-approval process, as it relates to your purchase offer.
The pre-approval does not limit you to a certain home price. It only limits you to a certain loan amount. If you can make up the difference out of your own pocket, then you could certainly offer more than your mortgage pre-approval amount on a house.
If you can afford to do this, there's nothing to stop you from pursuing it. But if you can't afford the extra out-of-pocket expense, you will probably have to find a lower-priced home to purchase.
Showing the Seller, You Have the Funds
When buyers who use mortgage loans submit a written offer to buy a house, they usually include a copy of their mortgage pre-approval letter. Or their agent will submit it on their behalf. Either way, it's important to show the seller you have the funds needed to complete the purchase.
It's also common for sellers to request proof of funds from the buyer. They usually want to see evidence that the buyer has money in the bank for their down payment (and possibly their closing costs as well). Real estate agents refer to this as a "proof of funds letter,".
Sellers want to make sure they're not wasting their time and taking their home off the market for a buyer who won't be able to reach the finish line and close the deal.
So, if you offer more than your pre-approval amount on a home, be prepared to show documents that prove you can afford it.

I do hope this has been informative, please do write to me at for any further questions or contact me at Jayshree Reddy - 408-489-6812. I'm a real estate agent based in San Jose, California.

About Author
I Live in San Jose. After a Long stint in Tech & Education moved to Real Estate in, Bay Area California.

I hope my expertise will come of help to you and you loved ones.



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