Financing in 91001>Question Details

Nicole, Home Buyer in Valencia, PA

If a person is pre-aproved for a loan, what are the chances they will get the loan?

Asked by Nicole, Valencia, PA Mon Mar 31, 2008

I got two offers on my house...both people are pre-aproved for the amount of the house. Is it likely if the person is pre aproved for the amount...they can get the loan? Someone said they have 17 days to get a loan, if that is true what happens if they don't get it?

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Nicole
There are numerous ways that buyers can back out of a purchase duringi the 17 day contingency period. In the current market, it is just as important for the PROPERTY to appraise as for the buyers to qualify. GIven the shifting market as long as the buyer's qualifications don't change (such as losing their job), then the appraisal and inspections need to pass also. Lenders are being very careful on homes that they loan, so a positive wood destroying pest inspection report and physical inspection report will help. I am guessing in Valencia your home is newer, so that should not be a problem. In some older homes, for exanple, if the roof is nearing the end of it's life, the lender might require that prior to the close of escrow the roof be replaced.

Going back to what I had mentioned at the beginning, buyers have any ways to back out of a purchase. Your Realtor's job is to monitor the buyer's progress and make sure that they are performing as agreed. You say you have two offers, is one a backup? Then it is even more important for the Realtor to monitor the buyer's progress and be aware of any issues in the process. You Realtor will no doubt be in touch with the buyer's lender directly to check on their progress, as well as checking on the appraisals and facilitating the other inspections. The main thing to know is that every time a new report is given to the buyers, a new three day recission period kicks in, meaning they have three days to cancel.

That means that you and your Realtor should do everything you can to have all the disclosures prepared as soon as possible for the buyers to review and acknowledge.

Good luck, hope it goes well for you
0 votes Thank Flag Link Tue Apr 1, 2008
Keith Sorem, Real Estate Pro in Glendale, CA
MVP'08
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Nicole,
The pre-approvals are good for only a pre-specified time. The lenders will pull the credit again and check everything one more time when they ask for the loan. They have to check to make sure someone did not go out and buy a new car after they got approval (it happens) so unless the buyer messed up their credit in the small amount of time then they should get the loan. You can always keep the other offer as a back up and put a time limit on the first accepted offer. Once you have a commitment from the lender you can let the second offer know.

Larry Story
Coldwell Banker Triad
0 votes Thank Flag Link Mon Mar 31, 2008
Hello Nicole. Loan approval is basically a two-stage process. The first step is getting the buyer approved. The buyer submits a loan application and has to provide certain documents to satisfy the underwriting requirements. The second part is qualifying the property. The property has to appraise for the purchase price and there can't be any obvious hazardous conditions (for conventional loans). The property also has to be insurable as hazard insurance is one of the funding conditions. When someone is pre-approved it means that a preliminary review of their financial situations has shown that they would qualify to get the loan, but the pre-approval is before the loan application has been reviewed by the lender. Pre-approval is commonly acceptable at the offer stage, but as a seller I would require that the buyer submit an approval letter within 7-10 days of the acceptance. The approval letter would only be based on the buyer's finances and the lending would still be contingent upon the property meeting underwriting conditions. I hope this helps you understand the loan approval process.
0 votes Thank Flag Link Mon Mar 31, 2008
Ute Ferdig -…, Real Estate Pro in Newcastle, CA
MVP'08
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