It is such an exciting feeling
when you receive an offer from a buyer and they tell you they are already
pre-approved. This is a friendly note to
not hang your hat up on those words.
When the market is hopping and
multiple people are looking at your home, it is a seller’s desire to take the
highest offer with the least amount of contingencies. So a great offer comes in and they present
you with a pre-approval. What does that
really mean?
A pre-approval is a letter of
intent, so to speak, from a lender that simply states based off of the initial
conversation and the information the buyer has provided to the lender, this is
the amount they should be pre-approved for.
Once the buyer starts working
with the lender more, they will have to provide hard documentation to validate
the information initially given. The
lender will then confirm income, monthly debts, credit scores, money in the
bank, down payment availability, etc.
This is an initial underwriting process that will then produce a
pre-qualification. This is the type of
letter that you want to look for!
Some lenders are actually
starting the pre-qualification process before the buyer finds a house and has
it contingent on the house information. This
is being done to give that buyer a leg up on their competition because the
housing market is so tight at some price points. The informed seller knows that benefit of
this type of buyer because it drastically minimizes the risk of a deal falling
through because of loan issues.
So before you get super excited when
that offer comes in, make sure that you are asking lots of questions about where
the buyer stands in the lending situation.
This is what I do for my clients.
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