Pre-Qualification for Potential Home Buyers
I’ve been speaking with a number of Realtors lately regarding the importance of the Pre-Qualification process and thought it might be a good idea to highlight its importance.
Many potential home buyers begin looking at homes without understanding the steps involved prior to engaging a Real Estate Professional. It’s essentially a matter of making sure the horse is in front of the cart!
“Going shopping for a home without a pre-qualification letter is like going shopping with one of those left over Visa gift cards you find in your wallet. You have absolutely no idea if the funds left on the card will cover the purchase.”
“If you’re serious about buying a new home, show the sellers you are serious. Start off by getting pre-approved for your loan – you’re more likely to get that house you love and the rest of the transaction will go much more smoothly!”
Amy V., Realtor
In order for a real estate agent to best help you find that right home, it’s vitally important to know how much “house” you can afford. That’s why you should reach out to the right Mortgage Professional first, before you contact an agent and start looking at houses.
Your chosen lender should sit down with you to assess your goals and objectives – and then help you choose the optimal loan program that best fits your needs. The first step in this process is the a pre-qualification or pre-approval.
Source: The Mortgage Reports
The Form or Letter
The Pre-Qualification Form was developed to provide information on the buyer’s ability to qualify for a loan without an actual loan contract. This form provides information to the Realtor regarding the ability of the borrower to obtain financing – and that way, your agent can begin the process of identifying particular areas and homes that are the right fit for you.
The form sets forth the loan amount for which the buyer can prequalify, assuming a maximum monthly housing payment. Most importantly, in states like Arizona, an offer on a home can’t be accepted without this Pre-Qualification Form.
For all of these reasons, home sellers and their Realtors insist that home buyers submit a valid pre-approval letter along with their initial offer for the home.
Sellers don’t consider offers from people who haven’t taken the time to determine if they can even get approved for a loan in the first place.
Again, make sure to reach out to a mortgage specialist prior to going house hunting!
Another article by Tom Bonetto is Pre-Qualification Letter – Questions to Ask
Written by Tom Bonetto, The Lending Coach