Can a preapproval letter help me negotiate?

Yes, preapproval can definitely help.

Getting preapproved^{Disclosure 1} early in the homebuying process helps set expectations, establishes a relationship with your lender, and shows sellers you're prepared. Here are some quick answers to common questions about preapproval.

When should I get preapproved, and how long does it take?

If you're thinking about buying a home, it's best to get preapproved early in the process. Talking to a lender will help you better understand how much you’re able to borrow. And it doesn't take long. You can complete an online application in 10 to 15 minutes and often get a response the same day. You can also apply for preapproval over the phone or in person.

How can I make sure the preapproval amount matches my budget?

Usually, people qualify for more than they actually want to spend. What's important is not the maximum you qualify for but the amount that feels right for your unique situation. Discuss your monthly budget and desired price range with your lender, who can tailor the letter accordingly.

What if the preapproval amount is more than my offer? 

We recommend tailoring the preapproval letter to match your offer, especially if your offer is for less than you qualify for. If the seller sees you are qualified for more, they could try to negotiate higher.

Can a preapproval letter make or break the homebuying process?

Yes. When housing markets are more competitive and sellers receive multiple offers, having a preapproval letter  could make all the difference. If a seller receives two identical offers, one with a preapproval letter and one without, they often go with the buyer who's already preapproved. Having a letter from a respected lender also might give you an advantage over one from a lender who’s less well-known.