Why do I have to get prequalified?

Asked by chloe123, Coconut Creek, FL Sun Aug 26, 2012

If I know that it will take more than 30 days to find a home I actually like, then why must I be prequalified first? This will only last 30 days, and it will knock my credit score down. It seems all of the realtors are telling me I need this, but it doesnt make any logical sense. Please help!

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MARCO HUAMAN, Mortgage Broker Or Lender, Coral Gables, FL
Sun Aug 26, 2012
BEST ANSWER
Hola

It actually makes much more sense, than what you imagine. You need to make sure, not only for up to how much you qualify, but also what type of property (it makes a diference, if its a Condo or a Single Family or a Co-op or Condotel). On another hand, you want also be aware of how much your closing costs will be based, on different kinds of properties and prices. Also, the downpayment you will be required, and type or property, will be determined by the type of program you can qualify for.
Your credit will not be affected, if you ran it within a time frame. The 3 credit repositories' softwares are designed to consider this aspect.
1 vote
On another hand, Credit Reports are usually good for 120 to 180 days. That means, that if you take more than a month or two, to find the property of your dreams (as long as nothing substancial changes on your credit or income), your situation could be more or less the same. You should not fear of gettin pre-approved, and actually it could work greatly on your own benefit. Please, contact me if you may need assistance.
Flag Sun Aug 26, 2012
Pulling a mortgage credit report, is a "Soft Pull". But it is necessary. You want your mortgage banker, to know if you really have the required credit history (not only the credit score), to qualify for the available programs. You may want to consider what other options there are, or limitations, based on your individual profile (If you were a VA, you were a relocation applicant, or you needed Lender Paid Closing Costs, etc).
Flag Sun Aug 26, 2012
I have no problem getting it done if it means my credit isn't constantly going to be knocked down.
Flag Sun Aug 26, 2012
Anna M Brocco, Agent, Williston Park, NY
Sun Aug 26, 2012
If you are a serious buyer, why not....should be aware that a mortgage pre-approval letter is required in order to determine your price range and for any offers to be taken seriously.
1 vote
Annette Law…, Agent, Palm Harbor, FL
Sun Aug 26, 2012
Torres,
Each agent you contacted that requested a pre-qualification letter explained why it was needed.
Why are you unwilling to accept their explanation?

A pre-qualification provides some assurance., from a third party, that you are CAPABLE of purchasing a home.

A pre-qualificaion provides some assurance, form a third party, the price point at which you are qualified to purchase

A pre-qualification provides some assurance, from a third party, that you are who you say you are.

This allows the agent you work with appropriate direction to show you those for sale properties that you actually are qualified to purchase. Very often, buyers underestimate the cost of a home purchase and find the home they love is beyond their means to purchase. That realization comes at a great loss of emotions, time and resources of everyone involved.

Being distracted by the suggestion of a 30 day duration of a pre-approval is truly losing focus on the real objective. That objective, buying a home, is the outcome everyone should be seeking.

If you are a serious buyer, demonstrate it. You may find you are reacting to something that is not as factual as you think or of such minor consequence you should have no concern. A real pro, as you have discovered, won't work with someone who is not serious, who is going to second guess every decisions, suspect grand conspiracies behind every tree and in every shadow. Get the pre-approval, and work with an agent to find a home. In the end, you will discover this is the least of your concerns.........unless there is something you have not revealed.
1 vote
Im more than qualified. Obviously I am just trying to monitor my credit and make the best decision.
Flag Sun Aug 26, 2012
Beverly Howe, Agent, Naples, FL
Fri Sep 21, 2012
In the olden days REALTORS actually knew how to talk to a buyer and ask enough questions to qualify them enough to determine whether they were credit worthy. Since the days of "breath and sign" loans are now gone, the foreclosure banks actually started the habit of forcing the buyers to get pre-qualified with their instituation in order to even look at an offer from a buyer. This then rolled over into the regular resale market. A pre-qualifed buyer has always been given priorty when their offer is presented to the seller over a buyer who is not prepared with a pre-approval. There is a difference between a pre-qualificaiton and a pre-approval.

If you want to keep your financial status confidential find an exclusive buyer broker to asisst you with your transaction. Some of us have some tricks up our sleeves to help you not give away the total amount you can borrow and at the time get the winning bid on a property.

“The most important thing a buyer can do is first of all work with a buyer broker.” As stated by AARP and the Consumer Federation of America from REALTOR® News.

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Foreclosures - the Wild West of Real Estate
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0 votes
Jennifer Fiv…, Agent, Red Hook, NY
Thu Aug 30, 2012
I can hardly think of an agent who would want to take you house hunting without knowing what a mortgage company would be willing to lend . Getting pre-qualified or better yet pre-approved is the first step in the process. Just think what a waste of time it would be for the agent to spend hours showing you homes only to find out you could not get a mortgage, or you qualified for less so you could not have the dream house you picked out.
0 votes
Susan J Penn,…, Agent, Weston, FL
Sun Aug 26, 2012
Dear Chloe,

Usually the person who does not want to be pre-qualifed is the person only looking and not serious about purchasing a home. It is someone such as yourself who complains about their credit score being lowered. Instead, you need to be pro-active and find out what type of motgage you can qualify for. Do you have enough for closing costs and down payment money? These questions you can ask a mortgage consultant.

A pre- approved buyer knows how much they can spend and tells the realtor they are ready to buy now! Realtors work very hard to help a buyer select a home and are looking for someone serious as this is their livelihood. Purchasing a property is usually one of the largest purchases you will make in your life so you need to let all parties know you can.

When an offer is made on a property, the pre-approval letter is part of the offer. Homes are selling quickly and the supply is limited.

Good Luck!


Susan Penn, PA, SFR, CDPE http://about.me/HomesForSale_SusanJPennPA
EWM Realtors® | A HomeServices of America Company | An Affiliate of Berkshire Hathaway
2000 Main Street, Suite 103 | Weston, FL 33326
T: 954.306.7337 | C: 954.557.5993 | F: 954.515.0200 | penn.s@ewm.com | http://www.ewm.com
0 votes
Stephen McRo…, Mortgage Broker Or Lender, Tampa, FL
Sun Aug 26, 2012
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Clloe,

I guess you can see that this is one thing that everyone agrees on 100%!

What I would do now is get pre qualified for either of the following loan programs:

97% LTV No PMI or 95% LTV No PMI (AVOID FHA IF POSSIBLE)

Get a Pre-Qualification Letter and then put 3% in a Title Company's Escrow account and get an Escrow Letter and then you'll be ready to roll!

see list of programs here: http://www.pro-option.com

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0 votes
Stefanie Coh…, Agent, Weston, FL
Sun Aug 26, 2012
It is of the utmost importance to be pre-approved before beginning your serious search for a home. There are a number of reasons why ALL of the Realtors are asking you to do this.

As Realtors, we cannot run your credit or look at your financials. A pre-approval letter from a mortgage professional at the very least, gives us the assurance that you are credit worthy and will most likely be able to obtain a loan. It is not a certainty, but does give guidance. Why would any Realtor work with someone who is not at the very least pre-approved? The time that is put into a property search alone is involved. Factor in the time and cost spent driving around and showing property.

As a prospective buyer, don't you want to know exactly how much you will be pre-approved to spend? A pre-approval gives you and your Realtor a price range to begin looking in. If you fall in love with a home that is out of the price range of your pre-approval, wouldn't that be disappointing to you? I am sure it would be.

And finally, if you are a serious buyer, you should be ready to make that offer! You don't know how long it will take to find the perfect home...you may find it quicker than you think. In this market, homes are selling, and valuable time is wasted when you first must speak to a lender before you can make your offer. All offers must be accompanied by a pre-approval letter if financing is involved.

Maybe you will now see that it makes very good sense to obtain a pre-approval.

Good luck!
Stefanie Cohen, PA, ABR, SFR
Prudential Florida Realty
0 votes
Steve Quinta…, Agent, Albuquerque, NM
Sun Aug 26, 2012
1. You might find a home in less than 30 days.

2. Prequal letters are often good for more than 90 days.

3. A credit report may not be required to get the prequal letter.

4. Not all credit inquiries cost you credit points. You get six a year before you lose points.

5. Getting the prequal letters you and everyone else you are a legit buyer and that you are not wasting your own and everyone else's time.

6. You should invest some effort to get organized before you ask anyone else to invest time in your project.
0 votes
Barbara East…, Agent, Pompano Beach, FL
Sun Aug 26, 2012
The Lenders want to determine your loan to value ratio. By providing your lender with information on your finances they will be able to come close to determining what amount you will qualify for. Ask your lender if he can provide this without running your credit. This way you know what price range to start your search in. Also, on the Seller side, they want to know if you have spoken with a lender and know that you will most likely qualify for a mortgage before they sign a contract. It shows that you are serious about purchasing. A seller does not want to accept a contract and wait three weeks to find out the the Buyer does not qualify.

Barbara Easton-Irvin
Atlantic Properties
Ft. Lauderadale, Florida
0 votes
Stephen McRo…, Mortgage Broker Or Lender, Tampa, FL
Sun Aug 26, 2012
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Why would you question all the realtors?

Have you purchased 500 homes in the past few years?

Well I'm sure the professional realtors giving you this good advice have been involved in this many deals!

It has almost become rude and inconsiderate for any buyer needing a loan to close on a deal in 2012 to ask to even look at homes without doing something so easy and basic as taking time to get pre qualified to obtain a letter.

As a Mortgage Broker I ADVISE YOU TO DO AS YOUR REALTOR REQUESTS YOU DO

If you were a seller, I would tell to you that NOBODY gains access to your home without a letter..PERIOD!
0 votes
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