- a ratified contract is the lender's hands
- an acceptable appraisal has been completed
- title search has been completed
- final verification of borrower's assets/liabilities/paperwork/etc
Once these conditions have been met, then the underwriter can give final approval, NOT before then. This is why, even though you have been pre-approved, you should still ask for a Financing Contingency and an Appraisal Contingency.
As far as CNTG/KO, that's usually a Sale-Of-Home Contingency. Most people can't buy a new home without the proceeds from the sale of their current residence.
As far as your situation...if you've spoken to a lender and they've provided you with a Good Faith Estimate and Lender Letter (pre-approval letter), then you're good to go.
The term "pre-approval" and "approval" are used incorrectly a lot of the time. A more proper question is "Do you have a lender letter?" The lender will state that you are approved for financing and that the only conditions are the ones I mentioned above.
Hope that helps...if not, let me know.
It's been a while since your original post, so you may already know all of this, but I hope I can help.
Pre-approval means you have a letter from your bank saying that you can afford "blank" amount on a house. You may not feel comfortable spending as much as you are pre-approved for on a house, but that is a judgment call on your part and what mortgage payment you feel you can live with.
Approval is when you are ready to put an offer on a house, have gone through the entire process of all the paperwork with your lender and are locking in a loan rate in preparation for a ratified contract. Ratified contract means your offer, or their counteroffer, has been accepted and SIGNED by all parties.
You can find some really good deals on foreclosures, and if you have the patience, they can really pay off. However, in a foreclosure you are dealing with a bank, not a homeowner, and banks are notorious for holding up paperwork to close the deal on a foreclosure. I've even come across ones where the bank selling the home didn't possess the deed yet because they had bought it from another bank who lost it in a file somewhere, and it took 3 months to clear up that mess. You could get lucky and have no problems, but be prepared to sit and wait 3-6 months if you find your dream home through a foreclosure.
Another sticky situation can be a short sale. This is when the homeowner is having to sell the house for less than what they owe on it, most likely due to taking equity out when the market was so high and then values dropped back to normal. When a house is under a short sale, the sale is contingent on the owner's bank's approval of the contract and sale price. Some deals can be had, but again, be prepared to wait.
There are tons of great homes at good prices in the Ashburn area that are not foreclosures or short sales. A good agent will help a homeowner price their house appropriately for a quick sale. These don't last long on the market - usually only a couple of weeks - so you have to move fast when you find one, and you can get to closing in as little as two weeks if your lender works well with your agent. Talk to your lender at least once a week so he/she knows how interested you are and how fast you want to move once you find your home. If you find a CNTG/KO, you could swoop in, with your lender's help.
Buying a home is an emotional process, and you may come across sellers who just seem crazy, especially when it comes to home inspections and things you think should be fixed before you go to closing. The seller could just refuse, but unless it's major, try not to sweat it. A good agent should guide you through the process and help remove your emotions from the weirdness, so you can close the deal on the house you really want, because that is your ultimate goal.
You mentioned you had been looking in MD at one point and are now looking in VA. I'm with Kangal Real Estate in Arlington, VA, and we are all licensed in DC, MD and VA, so we have to be familiar with all three. If you have any other questions. Feel free to contact me anytime.
CONTG/KO means that they are still accepting offers because they can "Kick Out" the first accepted offer. But...it's usually due to something like a Sale-Of-Home Contingency, which the first buyers typically have 72 hours to make good on/remove.
If the inital buyers remove it, then your offer is no longer accepted. If they don't remove the "Kick Out" contingency, then you're offer is accepted and you're in.
I am a Buyer Specialist who specializes in Ashburn, Sterling and Leesburg (Eastern Loudoun County). If you need an information on foreclosure/REO or short-sale properties in the area, check out my blogs (one is listed below) or contact me directly.
Loudoun County has a tremendous inventory and sellers are looking for offers. If you're out looking, it's hard to understand why you're not making offers. Homes under a KO contract will usually accept a good offer and give the present contract a deadline to remove their contingency or they'll simply be "kicked out".
Once a buyer and seller agree to terms...price, settlement date etc, and it's in writing, they're locked in to the contract. The buyers should have commitments before they buy but not every agent does things the same way...as you seem to be finding out! Check out my site if you'd like to contact me directly with any other questions. Keep the faith!! A good agent will make the process as stress free as possible. And fun too!
Also, the people with the houses CNTG/NO KO and KO .....did those people not have their finances ready? Aren't some of them waiting to see if they get approved by the bank? or am I completely wrong?
We have already submitted the rest of our stuff to the bank for approval anyway (not just pre-approval)...I am just trying to get an understanding of all of this because we have talked to/been out with 3 different realtors and all 3 of them told us different things.
It's all getting very frustrating....we started this whole process 2 months ago....and I feel like we have gotten no where.
It absolutely makes sense to get approval before you go shopping for a couple of reasons: 1. If there are problems on your credit report (ex. somebody steals your identity), you need to clean that up first, 2. When you're approved, you'll know exactly how much you can afford. The financing options are changing daily. Wouldn't you like to go shopping for a home knowing with certainty that you can really buy. It's a horrible feeling to put an offer in on the home of your dreams only to be on pins and needles throughout the process wondering if you'll actually be able to buy it. And you'd be heartbroken if after 30 days, you were declined! Let me know if you need further assistance.