You sure can tell a lot about a buyer by their Pre-Approval Letter

 

For House Hunters who are looking for a home on their own and Agents that are working with Buyers, I cannot stress enough the importance of being pre-approved for aa mortgage before starting the process. In our office we stress the " Power of the Pre-Approval" I make it a necessity to explain to buyers the importance of a pre-approval letter and how it helps tell the story to the seller of who they are and what they are capable of doing.  The days of presenting offers directly to the seller are just about completely behind us; so besides the contract and its contents the pre approval is very important.

Now when we are representing sellers and are reviewing potential offers the thought process remains the same; after reviewing the contract and its fine print, we check out the pre-approval letter and (who it is from) because it may warrant some investigation.

In most cases we contact the loan officer directly that issued the pre-approval and discuss briefly "The Deal" some call it a bit much, but we call it being extra thorough. 

Now some buyers come with Pre-qualification letters and we stop them before starting the house hunt and explain the difference to them.  Because we feel that before a buyer can understand the importance; they must first understand the difference between a pre-qualification letter and a pre approval letter.  Now without getting all technical; here is the nuts and bolts of it all. 

A Prequalification is an unofficial estimate of how much house you can afford. A loan officer will make an educated guess about your ability to buy a home based on your verbal or written submissions of income, finances, and credit history.  This is not the route to go if you are serious about buying, especially if its the home of your dream.

On the other hand, a Pre-Approval is a review of your financial documents (tax returns. W'2's, pay stubs, banks statements etc...) and determine the likelihood of a buyer being able to successfully purchase a particular property.

I often find that buyers come with pre-quals or pre-approvals from loan officers that we just are not familiar with and it actually creates a situation where we request a 2nd opinion because the worst thing to do is to place a house under contract, pay for inspections, appraisals, order title only to find out that the loan officer cannot close the deal.  Been that road too many times before, so we ask that buyers as well as our agents be very informed about the value of being pre-approved so that they can house hunt with confidence.  For us its not an option, but a policy.

Here is some quick advice for all:

Buyers: whether working with an Agent or not get a pre-approval from a reputable Lending institution so that your home buying dreams do not become a nightmare later on down the line

Sellers: Even if your Agent does not emphasize on it, review the pre-approval and make sure some due diligence is done to hopefully put out a fire before it starts

Buyers Agents: DO NOT put anyone in your car unless they have been pre-screened, its not only dangerous but can be a huge waste of time if you come across a window shopper

Sellers Agents: Review that pre-approval and consider calling the source to make sure it's official, last thing is you want to take a house off the MLS because you think it's sold only to find out that the buyer was never qualified to begin with.

Remember everyone gets hurt when deals die...we all know that many factors can kill a deal but when its something that could of been prevented; if only someone exercised a little more due diligence then we must do a better job of bullet proofing our transactions.

 

 

Malik Crichlow
BROKER/OWNER , CDPE, SFR
GoodBuy Homes NJ Realty
1811 Springfield Avenue Suite 2

Maplewood, NJ 07040
Office: 973.849.6907

Direct: 347.538.6864
Fax: 973.843.0277

Info@Goodbuyhomesnj.com
GO TEAM GREEN!!!