Preapproval
As a potential buyer competing for a property, you'll have a
better chance of getting your offer accepted by being as prepared
as possible. Consider this hierarchy of preparedness:
- 1. Neither pre-qualified nor pre-approved
- 2. Pre-qualified
- 3. Pre-approved
The benefits available at each level can be easily understood when
viewed from the seller's perspective. Imagine you're a seller in
receipt of multiple offers to purchase your property. A complete
stranger (buyer) is asking you to take your property off the
market for at least the next two to three weeks while they apply
for a loan. As the seller, let's consider the type of buyer you'd
prefer to deal with.
- 1. Neither pre-qualified nor pre-approved
- This buyer provides no evidence that they can afford to
purchase your property. You may wonder how serious they are
since they're not at least pre-qualified.
- 2. Pre-qualified
- This buyer met with a mortgage broker (or lender) and
discussed their situation. The buyer informed the broker
regarding their income, expenses, assets and liabilities. The
broker may also have seen their credit report. The buyer
provided you with a letter from the broker stating an opinion of
what the buyer can afford.
- 3. Pre-approved
- This buyer provided a broker or lender written evidence of
income, expenses, assets, liabilities and credit. All
information was verified by a lender. As a result, much of the
paperwork for this buyer's loan has been completed. This buyer
will probably be able to close quickly. They provided you with a
letter (pre-approval certificate) from the lender. You're as
certain as possible that this buyer can close.
As a potential buyer, you can see that being pre-approved will
give you the best chance of getting your offer accepted. This is
critical in a competitive situation. |
