Nothing is more frustrating to me than to have a buyer come to me with a “full loan approval” letter and it is NOT accurate. This creates all kinds of issues. The first issue is that they are very proud to be presenting me a loan approval letter! They clearly think they are READY to purchase. My response is to barrel through and find them the house of their dreams. The letter is the catalyst for me getting the “property search” high on my priority list. So, if it is not a seasoned approval, I have to be the one to explain WHY they are not quite ready. They have been looking online for months. They are ready to start the process of finding their dream home. So my telling them they have to “hold their horses”, has a negative affect on their home search experience with me.
The second issue: when I quickly find the home that fulfills their wish list. Doesn’t sound bad, right? Everyone is happy UNTIL we begin to structure the offer to purchase. This is indeed one of the most important parts of my job as a buyer’s agent. The OFFER should be created in such a way that the seller deeply wants to accept it. Even if it isn’t exactly what they want, they are drawn in and WANT to accept. If the buyer’s purchase monies are not all lined up, it takes away the strength of the offer.
IF the pre-approval letter is sincere, honest, and fully vetted, then we are on the way. BUT sometimes the buyer has not been fully informed to the back side of that letter. Using my own lenders, I know that they have been properly informed as to interest rates, and the final cost of buying the house on a month to month basis for their budget.
I recently had an experience where the lender had not fully explained to the buyer, or me, that the borrower/ buyer was not quite ready. To write prematurely would mean nearly $1000 a month over what they had anticipated. WHAT? That is horrible. But it is true. That is why having strong credit is so important. This buyer was very well qualified to purchase the property we found for them. BUT the variables in credit to make it affordable had to be reached first. Taking steps to pay down certain liabilities had been made earlier in the week, but to actually see it on their credit report was about one month away. To write the offer today, the month to month pricing would not be at all attractive to them. Instead, because the pay off of the credit liabilities, the raise in their monthly income, and a letter of explanation regarding their cash reserves, the package had not been seasoned. As a result they will likely miss out on the home they wanted. We don’t know if it will be there in a month, but now we are pretty well stymied.
Want to get more in depth about pre-qualifications? Give me a call today.