Do you know what it means when a real estate buyer is "Pre-qualified?"
It doesn't mean a thing.
To
become pre-qualified, a buyer simply gets on the phone with a loan
officer and tells his or her story. The loan officer will ask for income
and expense estimates and ask questions such as "Have you ever filed
bankruptcy?"
Then
he or she will say something along the lines of "Based on what you've
told me, you'd qualify for a loan of $X with monthly payments of about
$Y."
And there's the catch: The qualification is based ONLY on what the borrower has said.
And guess what? Some borrowers think they can somehow hide things like a
low credit score, a past bankruptcy, or an obligation to make child
support payments.
Not
only that, most borrowers aren't aware of the income items that a bank
won't allow them to use in their debt to income ratios, so they can
innocently mislead the lender.
Your buyer needs pre-approval, not pre-qualification.
You can only be assured that your buyer can actually purchase a house at a certain price if he or she has been pre-approved.
And even then, you have to make sure it was a complete pre-approval.
Unless it was a thorough job, a pre-approval doesn't mean anything more
than a pre-qualification.
When
prospective borrowers go to my lending partner Donnie at Mortgage Express for a
pre-approval, he collects all the same information that he would if they
had already found a home and were ready to buy. Then he verifies their
information and use either Fannie Mae or Freddie Mac underwriting
software to get the pre-approval.
With his pre-approval letter in hand, borrowers know that they will be able to get a home mortgage loan – as long as nothing changes.
And
things can change. That’s why along with the pre-approval letter he gives
clients a list of things NOT to do before their mortgage loan is final.
Any one of these things could upset the balance and cause denial of the
loan.
That list includes:
- Don't be late on any payments
- Don't quit your job
- Don't co-sign for anyone
- Don't acquire any new debt
- Don't transfer large sums of money ($200 or more) to your account from unknown sources.
If you're the buyer, come and see me online…
If you're getting ready to search for a home in Texas, visit Donnie Walton online at www.MortgageExpress.com and
complete hison-line form to begin the pre-approval process. With his
pre-approval in hand you can search with confidence, knowing that when
you find "your" house, you'll be able to make the purchase.
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