Loan Pre-Qualification

Cherokee County - Cobb County - North Fulton County

Is loan pre-qualification really necessary? Is it important to you as a buyer? ABSOLUTELY! Loan pre-qualification is probably the most important step you can take before beginning your home search. Not doing so can put you at a big disadvantage. Here's Why:

Buying Power and Loan Programs
Many buyers are unaware of their buying power and loan options, without going through the pre-qualification process first. If you proceed to look for homes in an inappropriate price range, it will equate to lost time and money for you and your Realtor.

Missed Real Estate Opportunities
All the wonderful homes you missed in the appropriate price range, while you were looking for homes in the wrong price range.

Inability to View Certain MLS Listings
Some Realtors, at the request of their sellers, will only allow pre-qualified buyers to view their listings.

Best Time to Shop Lenders and Interest Rates
The best time to shop lenders and interest rates is well before you submit an offer to purchase a home. Some Listing Agents, on behalf of their sellers, will stipulate in the Purchase and Sale Agreement that you cannot change lenders after Acceptance Date, to ensure the loan will close on time. This puts you at a disadvantage if you haven't shopped around before submitting your offer.

Purchase Contract and Loan Exhibits
When you submit an offer to purchase a home, the Purchase and Sale Agreement asks for specific information about your loan. FHA and VA loans both require a separate Exhibit to be attached to the contract. Both of these loans have associated costs to the seller, thus the importance of revealing your loan needs during contract negotiation. Should the need for this type of loan surface after Contract Acceptance, the seller does not have to agree to pay these additional costs. The result is, either you pay these additional costs, if your lender will allow it, or your contract could be nullified.

Loan Financing Contingency
New to the 2007 Georgia Association of Realtor contracts is the "Financing Contingency" section of the Purchase and Sale Agreement. This section of the contract now puts the burden on the buyer to prove they can obtain a loan within a negotiated period of time, after which the close becomes an "all cash deal".

Previously, buyers were allowed all the way up to close to prove their loanability. Due to many loans falling through at the last minute, this process has now changed and it is more important than ever to get Pre-Qualified with a reputable lender prior to shopping for a home!

The financing contingency works like this. The timeframe allotted is negotiated between buyer and seller during your contract negotiation. The average timeframe seems to be about 21 days from Acceptance Date. During this timeframe, you the buyer, should obtain full loan approval, including appraisal, so that you are sure you have a loan in place before the financing contingency is removed.

If you are unable to obtain loan approval in this timeframe, you can terminate the contract under certain circumstances as defined in the Purchase and Sale Agreement, which, by the way, does not include insufficient funds to close. If you surpass the financing contingency deadline, are unable to close and do not meet the criteria listed in your contract that would allow you to terminate your agreement with the seller to buy, then the seller, at the very least, would be able to keep your earnest money. At the worst, the seller could potentially sue you for failure to close, for an amount equal to the purchase price.

Again, extremely important to get Pre-Qualified before starting your home shopping process and to choose a reputable lender that you can trust to get the job done on time!

Required Pre-Qualification Letter with Offer to Purchase
It is common practice that the Listing Agent will require a Pre-Qualification Letter to be submitted with an offer to purchase. Without this letter, the seller may decide to refuse your offer. A Pre-Qualification Letter usually takes a day or so to obtain, depending on the lender. While you are waiting to obtain your Pre-Qual Letter, you risk losing the home of your dreams to another buyer that may come along. Being prepared before hand, eliminates this risk and undue stress.

Contract Negotiation
Submitting a Pre-Qualification Letter with your offer shows the seller you are a serious buyer with the ability to move forward to close. This often puts you in a better place of negotiation, as well.

Competition with Other Interested Buyers
In a competitive real estate market, qualified buyers have the edge. Should more than one offer be submitted at a time on the home you are interested in, it is very likely the seller will choose the buyer that has a Pre-Qualification Letter over one that does not.

Serious Buyer
Some Realtors will not work with a buyer until the buyer is Pre-Qualified, for all the above reasons. The school of thought is that a buyer intent on purchasing a home or property, will be willing to complete this very important process ahead of time for the benefit of all parties involved. Some Realtors will work with buyers that have not been pre-qualified, but the experienced Realtor Professional typically will not and this is the type of Realtor you need in your corner!

As you can see, obtaining a Pre-Qualification Letter is really an important step in purchasing a home! Loan Pre-Approval is even better! Equally as important is choosing the right lender that not only offers competitive interest rates, but whose service you can count on. If you need help in choosing a lender, please let us know.

For more information on buying and selling your home, please visit Cherokee County Real Estate - Cobb County Real Estate for your Cherokee County, Cobb County and North Fulton County Real Estate needs. When you are ready to get started, please give us a ring! We would be honored to help you through the real estate process.