When it comes time to write an offer on a house you will need a pre-qualification letter to accompany your offer. Lot's of agents these days will not look at an offer unless it has a pre-qual letter with it or some type of proof of funds. It is not required but it shows that you are serious and are in a position to actually buy the home. It is nothing personal, it all just helps keep people honest. Good luck in your home search, I hope you find a place you love!
I didn't read the previous 19 comments so if I am repeating...sorry. Here's the fact of the matter. Realtors have gotten tired of wasting beautiful Saturday afternoons and $75 in gas driving around folks who couldn't finance lunch. Believe it or not their are many inconsiderate people who will use a Realtor to go get ideas for decorating their current home. I myself don't have time to entertain such activities. I am a professional and my time is worth something. If a buyer is "serious" the 9 times out of 10 they have no problem getting pre-qualified.
It doesn't matter "what you want" you still need to be qualified to get it.
Other reasons include,
Knowing what homes to look at. If we spend all day looking at $350K homes because you just loves those...
and you are only qualified to purchase $250K homes. We just wasted a bunch of time.
Lots of sellers won't even accept an offer if the buyer is not pre-qualified.
I enjoy spending time with my family on Saturdays...
Hope this helps!!
Houston family forum
Think of getting a loan pre-approval as checking your gas gauge before heading out on a long drive - usually a quick and easy process. And with the current lending environment, it can also be eyeopening.
In the event you stumble upon the perfect property, not being pre-approved might cause you to lose out to a better prepared buyer.
Paragon Real Estate Group
Your agent won't be able to write an offer without a pre-approval letter from your lender. You won't have a pre-approval letter unless you get pre-qualified. If your agent presents an offer without a pre-approval letter - and there is an identical offer WITH a pre-approval letter - your offer gets tossed into the trash.
And as other agents have pointed out, if you're looking at homes with no clue as to what you can afford, your agent isn't out showing you potential homes, they are running an expensive cab service.
In fact it happened last weekend she was called up sunday afternoon at about 1pm to go show somebody a house at 3pm She arranged with the selling agent for the time and then had to travel 45 mins one way to meet the potential new client at the house they wanted to view. On opening the property up and walking around for almost an hour letting the client walk around, my wife asked a few questions regarding whether the property was what they wanted. The client then disclosed that they had a bankruptcy within the last 2 years! My wife was very professional and gave the client details of a few lenders in the area who could go over their finances and to try and get them pre-qualified for a loan. Although it is highly unlikely this client will be pre-qualified anytime soon! My wife wasted the afternoon and valuable gas money because she is not on a salary and like most real estate brokers work on commission basis only so they have to sell or buy for a client before they make any money!
There have been plenty of occasions like said above where people do not realize it is a business and not a free service for their entertainment! It costs Real Estate Agents money to travel to and from properties as well as the inconvenience on what I would call out of hours! My wife's real estate company she works for frown on their agents asking if somebody if pre-qualified before they show them any properties because they believe it rubs clients up the wrong way? It's all fair and well that they can afford to utilize their precious time and money on time wasters...but my wife can't, we have bills to pay like any normal working class family!
By connecting with lenders early in the process, you'll be able to shop around for the best deal (and fit for you), learn about your true price range/buying power, and repair any credit problems that you may or may not be aware of. You may even learn about special programs that could enhance your home buying process- like first time buyer programs, doctor loans, special renovation financing, etc. It takes a little time and energy to do your homework, but it's well worth it. Imagine how disappointed you'll be to find the home of your dreams and then learn that you're unable to move forward with the purchase.
Today's sellers want to see strong, confident buyers. These days, more often than not, sellers are requesting that pre-qual letters be submitted with offers as extra insurance that they're negotiating with a qualified home buyer. As a buyer's agent, I find that the most serious buyers are already pre-qualified or willing to take my advice and go to a lender in the early stages of the process.
Remember...KNOWLEDGE IS POWER! Do yourself and your agent a favor and get pre-qualified!
As a buyer, it is wise to get pre-qualified before you go out looking for a home. There are many reasons, but the most important reasons are that it benefits you, your agent, and the seller.
First, the most important beneficiary, of course, is you. The mortgage prequalification step is a relatively simple one, but it is an important one. It begins the process of formally applying for a mortgage, and it gives everyone involved--especially you--a clear sense of the direction they should be headed. When the lender pulls your credit report, he will verify that there are no outstanding issues that you need to take care of before you buy. Even paying off a small debt can make a difference in your credit score and the mortgage rate you get.
Second, it benefits your agent, because by knowing what your financial parameters are, we can spend more time looking for houses that "fit" and less time pursuing dead ends. As an example, no matter how much you might want a home for $100,000, if your qualifications say $90,000, your qualifications say $90,000. When it comes to mortgages, "yes, but" doesn't carry much weight!
Third, it gives you more bargaining power. Look at it from the seller's perspective. If you had 2 offers on the table for your house, one from a fully pre-qualified buyer and the other from an "I'll get around to that soon" buyer--to which offer would you devote the most attention? Even if the pre-qualified buyer's offer was $1000 less, would you take the chance on the buyer that perhaps may not be qualified? When it comes to a seller evaluating offers, "a bird in the hand..." definitely applies.
And the final reason, it makes the process go more smoothly.
a realtor is paid comission only if you buy.
Why would we want to spend our time driving someone around looking at $750,000 homes when they only qualify for $400,000.
Or this is the tought part, buyer may not be intersted at all just wasting both of our times.
Also, if you find the home you want being prequalified already will allow you to write an offer confidently. An offer will need to have preapproval with it.
Here's an example, you go to the grocery store. You wander through for a couple of hours picking things up, putting them back, and making your ultimate selections. You go to the cash register, the cashier rings them up. But, when she asks you how you're going to pay, you say, "Hmmm, I'm not sure how I'm going to pay or even if I can pay." The cashier voids your sale and moves on to the next person.
Same with real estate, you have to know how you're going to pay BEFORE you get started. It saves you ALOT of time and trouble. You don't want to be looking at things that are WAY more than you can qualify for. Partly because if you start high and have to go lower, you'll be disappointed in the quality of the lower priced houses. The other thing is that a seller, whether it's a traditional seller or a bank, won't even look at your offer until you have mortgage pre-approval.
Assessing your level of risk in a real estate transaction is essential. Why would you put yourself at unnecessary risk by letting the perfect house get away because you didn't have your mortgage pre-approval done, so someone else snatched it up. I've seen it happen, even in this market! Good luck~
I recommend to my clients to get pre-approved for several reasons but the most important I will discuss. When buyers begin to look for a home, they start to dream and find many homes they like. I want them to know that what they are looking for they can actually qualify and afford. Nothing is more disappointing then finding a home, falling in love with it and then learning that you can't afford it.
Many buyers make financial assumptions but with the many changes in the lending industry, it's so important to know where you stand and if you find something you like while you are looking, you have created for yourself a better negotiation stance proving to the seller that house you are negotiating for you can actually purchase.
There are other options for you to see houses if you are not ready to talk finances but want to see what is out there. Visit open houses. Most sites like Truila have Open Houses listed. Check those out first. Also, if there are new homes in your area, visit the model homes so you can get an idea for what is out there.
If you have a good guess at the type of home you qualify for but are off by even a little it can be a very heartbreaking experience.
First you could view many homes that appeal to you with Master Bathrooms or Fireplaces and fixed up basements. If you decide to write on one of these only to find out those items are out of your price range it can be very hard to go backward and now start looking at great places -but they will not meet the standards you were used to seeing.
The next problem is you can start the process of house hunting and perhaps you fall in Love with a place that really is perfect for all your needs. The listing agent may require all offers to have a pre-qualification letter included as part of the offer. So you race to the bank and find out it could take 1-2 weeks for them to have everything they need from you to qualify you for their loan program. In the meantime that house receives a offer and will forever be the one that got away and when you start the search over now with Pre-qualification letter in hand- all the places are compared to the one that got away and it's hard to move on and find another place to love. It's for your own good that we ask you to do the house hunting in the right order. My Dad would have called it "having your ducks in a row" before you start. I hope this helps you understand why it's important to start this huge life decision fully prepared.
Buying a home is a huge event and their are steps you need to take before you start looking at homes. So you are preparied what the monthly cost and the settlement cost are going to be.
I think you should ask yourself this: "If I were charged an hourly wage for an agent's time, resources and expert guidance, what would I do to make sure that I incur the lowest possible bill?" You would obviously do everything you could in advance that would speed up the process and save you money! In most cases, the Seller pays the commission and unfortunately this prevents the buyer from understanding or respecting why Sellers and Agents only want to deal with people who are ready, willing and able. Our sellers expect this. I work with a lot of buyers -- in fact, 80% of my business is buyer side. However, I confirm I am working with buyers with the purest intentions so that I can better serve ALL my customers and be a good steward of my time and resources. It is the right thing to do. Cindy Head, Realtor Roberts Real Estate, Ocala, Florida
Danielle Watts - Naples, FL Loan officer
She is honest and no decoration on her explanation. She can catch the point very well. She is not shy to talk about how an agent survives in the business.
I like the business people who do not mind to say something about themselves rather than the people who cover their real mind with some reasons which sound like ethical and professional.
You do not want to look at a house priced over what you can buy, fall in love, make an offer and then get crushed when you can not get a mortgage on it.......
PLEASE SEE MY BLOG WITH TIPS AND ADVICE ON GETTING AMORTGAGE IN TODAYS MARKET.
You need to be prequalified because frankly it does not make sense to look at homes you may not be able to afford. Why do that to yourself? If you speak with a lender and understand not only the price of the homes you can afford, but all the other costs involved (and most importantly, that you are comfortable with the monthly payments on a mortgage) then you will be informed. It doesn't make sense to go shopping if you are not informed, don't you agree?
Get prequalified so that you can seriously start investigating neighborhoods and floor plans. It will make your home search not only easier, but better. Knowledge is power.
Rachel LaMar, J.D.
LaMar Real Estate, Inc.
Fairfax Mortgage Investments, Inc
34026 Coastal Highway
Bethany Beach De 19930
By getting a pre-qual letter you and your Realtor know how much home you can afford. This seems to make sense.
Bonnie Chernin and David Rogoff
Fillmore Real Estate Branch #19
2926 Avenue J
Brooklyn NY 11210
917-593-4068 (Davidâ€™s Cell)
646-318-5031 (Bonnieâ€™s Cell)
Getting pre-qualified up front will help deliver these wants to buyers. Remember agents are independent contractors working out of their own pockets to deliver a service. They have families to feed, mortgages to pay and cars to fill up with gas. And in todays housing market the best agents that are still in business can not afford to waist time and money with a buyer that is hopefully qualified.
If you pay your real estate agent as you pay your doctor, CPA, lawyer or gardener, you may not be bother again and your agent would be very happy to do more than your want without the pre-qua letter.
By the way, pre-qualified letter is from a bank or loan broker. Pre-approved letter is from the bank which you submit your loan application. Technically, pre-qualified is just a piece of paper and means nothing or just a littler bit more than nothing.
Besides, your Realtor is required to submit a pre-qual letter with your offer. If it is a Saturday or Sunday, you find the perfect house with no pre-qual letter, and other offers come in on that same property, your offer may not even be considered until Monday morning - when it might be too late and another offer is accepted.
Why put yourself in that position to be dissappointed or upset?
It is just good business sense to be prepared for the process.
Phyllis Crosby, Realtor/GRI
REMAX REALTEC GROUP
fall in love with a house you really love, then go to your local banker and they tell you the bad
news you arent qualified, you will be angry and mad.
So inorder to avoid that, go to the banker first, after going over your credit scores, current jobs salary,bills, and so on they will tell you yes or no on getting prequalified.
Also if you do get prequalified, they will tell you how much you can afford.
After you are prequalified, then go out and find your dream home.
Also on the rates, if your going to stay in the home a long period of time, I suggest a 20-30yr fixed rate.
Sometimes people can afford a 15yr fixed rate,with the 15yr rate,the rates are usually cheaper.
Only get a ARMS if you are going to move within 5yrs.
God Bless you
We always try to educate our buyers before they just jump in their cars and start hunting for properties. It's unfortunate that many buyers start their search with out hiring a smart and educated real estate agent first. Buyers: Exclusive Buyer Representation is a Right that should be exercised. Interview agents and choose the best one for your needs and area. You wouldn't hire 3 or 4 attorneys to represent you in case, so why would you work with 3 or 4 agents to help you find your dream home? Buyers do your research of areas, neighborhoods, and schools don't always assume your agent knows. Buying a Home is a process and going through the process methodically to make educated decisions helps your emotions. Education through the process will help avoid buyers remorse!
Why not? It only takes an hour or so and in the end, it is for your own good. If you donâ€™t know any lenders, start with your local bank as you already have a professional relationship with them.
Best of luck.
No matter what price range you are in, there is always a house that you would like better. Bigger, newer, better view/schools/lot/appliances/neighborhood/finishes/flooring/layout/commute...a drain in the 4-car heated garage, radiant floor heat in the bathroom where the jetted tub is, on and on....all at a price that is just slightly above where you can actually qualify for a mortgage and make the payment every month. But you fall in love with it anyway. Ooops. Can't buy it? Astonishing. Now, go back to the 3-bedroom, 1-bath with no garage, a gravel drive in the iffy neighborhood by the freeway. The one you can buy. How does it look now?
Save yourself the disappointment.
The above link is from CNN's Home Affordability tool. It's a great starting point but doesn't take everything into consideration that a full approval might. Also, you don't have to register or anything. Eventually, you will have to get pre approved for any offer you want to put in.
Your realtor doesn't want to waste their or your time. Getting pre approved lets them know you are serious and allows you to put in an offer on a property that you want to buy. It's understandable that you don't want to do that right away but explain your reasons to your realtor and this might be a good judge if you want to work with him or her.
Best of luck.
Hope this helps.
A Realtor gets paid at Closing. This being said, we need to qualify our business expenses and time we spend on clients that are ready, willing and able to purchase a home. You would be surprised how many "clients" ask us to take them out and either have no plans to purchase a home or they are more than 6 months out from buying. Real estate changes as quickly as the weather. A home that is on the market today may not be available or may drop in value if the neighborhood is suddenly flooded with foreclosures. There are many, many factors and due diligence that a Realtor must take in to consideration and research before we make the appointment to show you a home. All this work is part of our business and yes, this is understood. However, with so many unknowns through out the process we must take control over the one area that will either make or break us - the ability for the client to qualify for the home.
I sincerely hope this response explains our position. We love what we do but we must also protect ourselves.
Lucy A. Puniwai
(214)783-6416 - Cell
(682-224-8050 - Fax
Janeese Jackson, Principal Broker
Real Estate Resource, Portland OR