Unqualified or unapproved home buyers are at a disadvantage
You will hear the terms Pre-qualify and pre-approve throughout the home buying process. It is a step whereby a lender looks at a borrower and determines two things 1) do they qualify for the mortgage product we are offering, and 2) how much we can approve them for?
Pre-qualifying means the lender has set certain criteria, and the borrower meets the criteria (must have a credit score of 620 and an annual income of $50K). There is no credit check run on the borrower.
Pre-approval means the lender has taken the steps with the borrower to validate the criteria they set forth. In other words, the lender performed a credit check on the borrower to validate the 620-credit score requirement, and they gathered income statements from the borrower to validate the $50k income requirement.
It is important to know that most sellers will not accept an offer without a pre-approval or pre-qualified letter. The reason being you are not ready to make an offer in today’s market. The competition is significant and moves very quickly. Unqualified or unapproved home buyers are at a disadvantage.
Pre-Qualified buyers can also be at a disadvantage. Let’s say a pre-qualified borrower places earnest money and due diligence money down at the offer. At this point, both seller and borrower are locked into the purchase. The seller takes the home off the market, and the borrower proceeds with their due diligence. All is well, the due diligence period goes smoothly, and we are at closing. What happens if the lender finds other issues at this point and is only able to approve the borrower for $250K? The home is selling for $400K. The seller loses their selling power, the buyer loses their due diligence, and no one walks away from the table a winner.
For more information on pre-qualification vs. pre-approval, call me Vanessa K today at 984-355-9703. You can also drop me a line at VanessaKbroker@gmail.com. I’d love to hear from you.