MISTAKE NO. 2
FAILURE TO GET PRE-APPROVED
(NOT JUST PRE-QUALIFIED - THERE IS A DIFFERENCE)
Many of today's leading real estate agents prefer not to work with a buyer until the buyer is pre-qualified for a loan. This may seem exclusionary at first, but by doing so the agent is actually doing the home buyer a huge favor. The truth of the matter is that shopping for a home without being pre-approved wastes everyone's time. That is why I always advise anyone interested in buying a home that the first step they should take is to their mortgage lender. Once there, they should get pre-approved, not just pre-qualified.
Let me explain the difference.
Being pre-qualified means that you have sent a few minutes with a lender who may have asked you several questions, but generally has no real insight into your financial obligations and, by extension, your overall financial situation. Even if a lender provides you with a certificate indicating you have been pre-qualified, the seller knows that no financial information has been verified at that point, which devalues your negotiating power.
On the other hand, being pre-approved indicates to the seller that you are a serious prospect. Getting pre-approval requires disclosure of financial information and provided you with an actual dollar amount that you can spend. Not only does this provide you with the confidence to shop smarter, it also gives you an advantage if more than one buyer is interested in a property. If the seller has three offers, but your offer is the only pre-approved offer, the seller knows you are at least one step ahead of the others and can proceed more quickly. The other offers may encounter snags in getting the "pre-qualified" loans actually funded. By being pre-approved, that will not happen to you. It is not as fun or exciting as jumping in the car and looking at houses, but getting pre-approved is a great way to give yourself an advantage when the time comes.
Labels: finances, pre-approval, pre-qualified
# posted by
Bryan Vogt @ 1:26 PM