Does it really make a difference?

When an agent writes a purchase contract, one of the most important things included will be how much cash the buyer is going to put down, the type of financing and the terms of the loan.  Is it going to be a 20% down payment with a 30 year fixed loan at 6% or is it going to be a 0% down (100% financing) VA loan?  Do these loan terms make a difference to a seller?  Is being pre-approved going to give you a better position than if you are pre-qualified?  You betcha!   

So, you want to buy a home.  You've filled out a loan application, spoken with a loan officer and received a pre-qualification letter stating that "based on what you have told the loan officer", you qualify for a purchase price of X amount of dollars.  Yeah..... Now you're ready to put in an offer.  Uh, slow down there Bessy.  

No, you're not ready.   

In this real estate market, a pre-qual letter is about as valuable as the paper it's printed on. 

Pre-approval is the way to go. 

It would appear that with so many homes on the market, sellers would jump at any offer.  This is not the case.  Many of the homes on the market are bank owned properties or short-sales.  The bank is making the decisions about what offers they will accept.  They want to see that the buyer will be able to close escrow within a short time frame.  I've seen properties priced low in order to stimulate interest and get multiple offers.  It becomes a bidding war.  The winner will most likely be the best offer by a buyer with loan approval.  Having loan approval gives the seller one less thing to worry about.  The longest part of the escrow process is obtaining financing. 

If you are pre-approved, your lender will issue a commitment subject to a satisfactory appraisal.  Appraisals can be done quickly.   

Don't put the house before the loan.  If you have not been pre-approved, it's way too early to count on getting your offer accepted.  Sure, anything is possible, but its highly unlikely. 

Pre-approval requires that you complete a loan application with credit reports and verifications of employment or income, bank accounts.  The complete loan file is then submitted to an underwriter for formal loan approval.  There may be some issues with your credit or income that need to be addressed.   

If you want your offer to be taken seriously by the seller, get your financing in order.  Get pre-approved FIRST.

Now you're ready to make that offer.

I hope this information was helpful to you.  If you have further questions or need assistance in buying or selling a home, feel free to contact me. 

Sincerely,