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2. To make sure you can afford to buy a home.
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65 Comments on Why do I need to get Pre-Approved first?
Great blog! Bummer, the "reblog" button is not working!
Just like Tni.. I just DRAFT a blog on the same topic.. Great information.. Your points are really good for the buyer to consider before looking at homes.
KNOWING what a buyer can do can be critical. Without knowing can present problems that they would avoid otherwise. We had a client call once that wanted to sell. He was a referral but had already been in a new home subdivision and said that he was buying a larger home and wanted us to list his home.
We asked if he had been to see the builder's lender and he said he had a conversation with him and it was fine. Long story short; he listed his home, we received an offer, we counceled and said to make sure he could qualify for this home before he signed the contract. He said he didn't have any problems...... He signed the contract on his home (we explained that this would be legally binding.....)
Later the builder said he didn't qualify, he decided he would just purchase one of the smaller models...no he still didn't qualify. He ended up selling his home and moved into a rental. He bought from us a couple years later, but this is a story I can share with all my clients to help them avoid making any similar mistakes. It was a good thing we had pressed the issue so much as he knew from our pressing the issue that it was all on him and he had no reason to be upset with us.
Buyers on the otherhand get their hopes up for a pricerange then later find out they can't go that high. This makes it difficult on them when they have to drop the price. They are not satisfied with the lower priced homes.
Nice post. I would reblogg it if I could. Some people need to understand this.
Michelle, Excellent post! Very important for buyers to understand these points!
I'd like to add two reasons that I always share with clients who ask...one, as a woman taking people to homes that are empty with people I don't know, it provides me a little more assurance that the client is who they say they are and little more of a "safety check" for me. Google them too, just to see what comes up! Second, a buyer who is pre-approved tends to be more serious about buying and it protects my time with my family. So far, no one has had even a minor issue with these reasons!
Michelle, great post! Such good comments as well. Definitely re-posting! It's so important for buyers to understand the process and know what they're getting into. There's A LOT to a mortgage and buying a home post bubble. Things have changed and it's not your "dad's" mortgage anymore. It's not your last mortgage if you've bought before. The mortgage market has done a paradigm shift to the point of over correction practically in their pursuit for sterile mortgages and the underwriting guidelines to which every lender is now adhering. A buyer better be a pretty darn good risk for the lender to be able to sell the loan to an investor and can no longer just have a pulse to get a loan. It's all for the better in a lot of ways and killing business for some. But, at least a buyer knows when they're pre-approved that it's for real. Hopefully they're lender had educated them and they're smarter about what they are getting into because they know what it's going to cost. They're not wasting anyone's time, including their own. A legitimate transaction about to take place and they are only dealing with the professionals that made it through that bubble to serve them and take care of their needs; the way we do it now.
Michelle- Great post! All buyers need to read this post. You and I know very well that even the Pre Approval does not mean much anymore but it certainly is better than nothing. Remember the one where the buyer gets their denial letter on the day of closing AFTER they had ALL their approvals in? What a nightmare that was! Now the only financing that makes us feel comfortable is no financing, all cash, :)
Concise and informative, great post.
Survey says: So you know what you can really afford and you can prove you can afford the offer you are making to the Seller.
Clear and to the point. If I was buying I would be contacting my lender after reading this.
In general - Pre-approval conststs of checking borrower's credit, 2 years employment information, 2 current pay-stubs (if W2), 2 years Tax Return (if self-employed) and 2 months bank statements (for down payment and reserve). Anything short of that should be questioned.
Like the post! Thanks
It seems we are ALL on the same page when it comes to buyers getting pre-approved FIRST and I appreciate all the reblogs and those who've tried re-blogging, but couldn't.
Great list. It would be hard to choose which one of those points is the most important.
Time is money and experienced REALTORs know that. Why spend hours prepairing and half a day showing homes when the buyer can not be qualified for a mortgage.
Simply awesome post! Definitely the most direct and easy to understand explanation of the benefits of getting pre-approved that I've seen, I think. So glad it earned you a feature!
Really excellent job, Michelle! I'm joining the re-blog bandwagon!
Whoops...guess I can't re-blog! :-(
Yes! Never show a property without knowing a buyer is preapproved. Great post!