Mortgage preapproval letters, your thoughts please

For our client we create several letters in 5k increments.  I personally think it shows the other side all of your cards if you go in with your maximum amount.

I agree with the above commenter.   As an old-timer told me years ago, "The Seller just needs to know that the buyer is qualified to buy their house; not the one next door too." 

Russ I agree with you.  If I am truely representing my buyer clients than I am trying to get them the best deal "for them."  It seems to me that if you give a pre-approval to the seller with an amount that is larger than what the buyer's are actually offering, than you might as well go ahead and be prepared for a counter.

We match the preapproval with the purchase price.  I agree with the comments that the focus should be on being qualified to purchase at the price offered.

I hadn't thought of it the way you're saying.  My thought is along the same lines as your associate in your office, but I consider myself a buyer's agent.  If the pre-approval letter shows my buyer is able to qualify for more than the purchase price that makes them a stronger buyer than being approved for only the purchase price.  Just because they are approved for more doesn't mean they have to spend it all.  If the Seller comes back with a counter that I think is unfair or trying to take advantage of my clients, then it's my job to advise them as so.  Once the Seller counters, my clients can reject it if they wish and find something else to buy.  The way I look at it, until there is a fully-executed contract, my buyers have all the bargaining power! 

Russ, I see nothing wrong with what you did.   I always ask for incremental approval letters (the look on the face of one lender was priceless when I wanted 4 separate ones).   In the case you described above I would have done the same thing (white out) until you could get another letter on Monday.

You are representing the buyer.  You are doing your job.  Don't let anyone else sway you differently.

Hi Russ, you commented on my post a few days ago, so I'm coming around to see what you are up to! This was an interesting post - a topic I never thought about, so Thank you! I appreciate it. I'll have to think on it before I have an opinion.

I'm in favor of showing an amount very near what the offer is... why show your hand to the competition?

Hi Russ - I agree.  I do not want to disclose the upper limits of my clients loan qualification.  The seller does not need to see that; they need to evaluate our offer and make a decision on what they will do next. 

I believe that whiting out anything on an official document like a pre-approval letter is unethical and verges on misrepresentation, both grounds for losing one's license here in California.