Home buyers should get a preapproval before they begin their home search. Even if they know there will not be any problems with getting approved.
The continuing news is that 30% of home sales nationwide are foreclosure sales. Additionally, as everyone should be aware there has been significant tightening of credit standards with home loan approvals.
This means for all prospective buyers, it is more important than every to get pre approved. With individual sellers a preapproval letter can make your contract offer stronger than an offer submitted that does not have a preapproval letter.
With foreclosure properties, the seller is a lender, an institution. They do not accept offers without a real, honest to goodness, approval in hand. Many require that the buyer get approved also with the lender's retail office. This is as much to be certain that the buyer is qualified as it is to try to keep the loan.
This is also true with HUD owned homes.
Preapproval means:
Credit
Income
Assets
have been approved, by an underwriter.
This takes time. For many, credit needs a little work. For many, assets must be identified. With FHA loans credit guidelines are a little easier, but the days of subprime lending are long gone. In Chattanooga, you can consider down payment options such as CNE or THDA second mortgages. It may be that Rural Development is a better option. The buyer's agent needs to understand this so they can help you search in qualified areas.
The lesson is that prospective buyers should get preapproved at least as soon as they start looking for a home, if not before the start looking.
I have many stories of buyers who improved their qualifications prior to beginning their search. The result is that they know how much home to buy, the closing process went smoothly, their offer was accepted.
I have many stories of buyers who searched and found a home, but were not qualified. The result is that they were disappointed in losing this dream home and they then started the process to become qualified.
It is a new world in home finance and in home purchasing.
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Richard Smith |
American Acceptance Mortgage, Inc |
FHA, VA, Rural Development, Conventional, Jumbo,
Reverse Mortgages, FHA 203k Renovation
Home financing in Tennessee and Georgia.
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Thank you for visiting. This is the professional blog for |
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Richard Smith Conventional, FHA, FHA 203k, HUD $100 down purchases, VA, Jumbo VA, Rural Development, Jumbo, FannieMae Homepath, Home Equity Line of Credit (HELOC). |
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Stearns Lending, Inc |
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Cell phone: 423-280-0345 Email: RSmith@Stearns.com |
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Visit my website to inquiry about a home loan. |
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Read my most recent articles in Scotsman Guide. |
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This blog represents the opinions of Richard Smith. The posts and comments written on the blog do not represent the opinions or positions of Stearns Lending, Inc. |
Richard, Thanks for the post. You would think with all of the information available on the home buying process, that people would do a better job of coming prepared. Unfortunately, that is not the case. I just turned down a showing because the prospect refused to get a preapproval first (and they were not cash buyers).
William some buyers know they will be qualified and think it is not a necessary step. But today, more than ever, I think it is necessary for the real estate agent as well as for the seller.
Hi Richard, The Best Advise! When I explain "How I work" I get them pre-approved before we ever go looking at properties. At first Introduction I also present my Agency Disclosure . It helps them understand that I am representing them and their interests exclusively.
There is no obligation to stay with the preapproval lender, I would like them to stay with me of course. But even the buyers with the strongest qualifications must respect the process.