Question

margo has found her dream house. it’s listed at $370,000, and she plans to offer $365,000. she has a letter from her lender stating that she’s been pre-approved for a maximum $375,000 loan. why should she ask her lender to re-write the pre-approval letter? unset starred question

Answer 1

By providing the letter with her maximum loan amount Margot risks reducing her negotiating ability

This is further explained below.

What is a pre-approval letter?

Generally, A letter from a lender that states that the lender is willing to lend to you in the event of prequalification or preapproval is a document that states the lender is willing to lend to you up to a particular loan amount.

This is not a guaranteed loan offer, and the document that you are looking at is based on certain assumptions.

In conclusion, Margot runs the risk of decreasing her capacity to negotiate by diminishing her leverage by submitting the letter with the maximum loan amount.

Read more about the pre-approval letter

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