Why
It Is CRITICAL to Be Pre-Qualified!
The first step that I tell
all buyers starting the home buying process is to be pre-qualified or
pre-approved for a loan. There are several reasons for this and all of them
benefit YOU the homebuyer!
What is the
difference between pre-qualification and pre-approval?
Loan pre-qualification is a simple process. It takes into account basic
information regarding your finances and gives you an amount for which you may
qualify. This can be done verbally over the Internet. The pre-qualified amount
is based solely on the information you provide. You should only work with a
lender that pulls your credit report for pre-qualification. Sellers too
often require this.
Pre-approval is a
much more involved process. The lender will take all pertinent information
regarding your finances and perform an analysis of your current financial
status. This will ultimately give you the exact amount that you will be eligible
for (depending on what type of loan you decide to go with). Being pre-approved
lets the seller know that you have gone through an extensive financial
background check and there should be no unexpected obstacles to buying the home.
Pre-approvals hold much more
weight with sellers than pre-qualifications.
What are the benefits of
pre-qualification or pre-approval early in the process?
·
If there are any errors or issues
that need to be corrected in your credit, you will need as much time as possible
to fix them – even if they are not your fault!
· Shopping for a mortgage early
gives you time to shop around for the best deal. There is not enough time to do
this once it is time to make an offer. By shopping early you could save
yourself thousands of dollars in the long run!
· More sellers are requiring it and
will
only accept offers that include a pre-approval or pre-qualification letter.
This proves to them it is a serious offer before they take their property off
the market.
· It gives the buyer more leverage.
A pre-approved buyer can go into negotiations with a seller with more confidence
and leverage. Plus, if you are bidding against another buyer that has only been
pre-qualified or not qualified at all, you have the advantage!
· It takes stress off of the
buyer. There is nothing worse to a
buyer than to spend all the time and emotional energy looking for a new home,
finding one you love, THEN finding out they don’t qualify for a loan to buy
it. I think this is cruel.
· It helps the buyer in their search
for the ideal home. Instead of wasting time on homes that they are not able to
afford or settling for homes that are less than what they want, being
pre-qualified lets them know exactly what price ranges they should be looking
at.
I
believe that this is so critical to the buying process and so beneficial for the
buyer that I will rarely work with a buyer that refuses to do this. Starting
the home buying process without this step is like planting a garden without
seed. Something may still come up, but chances are it won’t be what you want.
Do you want to take that chance? |
