Today I'm starting our Albuquerque Real Estate FAQ's....a series of simple answers to often asked and seldom answered-in-plain-English questions about real estate.
"Why do you always ask if I'm prequalified?"
Let's see, you call on a property and ask to see a home that you find on the Internet, or drive by - and the broker will ask you "are you prequalified"? While it probably feels like an invasion of your privacy or too picky-uney - here's why you are being asked:
When we, as real estate professionals, list a property, very often one of the items that we go over with the seller is that we are making sure that the security of the property is on the top of our priority list...we make sure that the alarm codes are kept private, and that the home will be secured after a showing. During these discussions a seller will almost always ask "can you make sure that the buyers are prequalified, and not just lookie loos"? It takes quite a bit of effort for a seller to get ready for a home showing. A seller must rearrange their day, do double duty on the staging of their home and have to be gone from their property while the showing is taking place. The sellers want to make sure that the buyer looking at their home isn't just curious about the decorating, or doesn't really have the ability to buy the property if they fall in love with it.
"But I've looked on-line and the on-line form says I can afford it"
These on-line mortgage forms, they are so easy! You fill them out and all they are asking for is income, debts, and voila....it spits out a purchase price and interest rate....but that's only one layer of the prequalification process. Things such as business settlements, divorce settlements, tax filings, etc - can all affect how your mortgage process is really going to behave once you put it into play. We have seen very high income buyers not be able to get a mortgage because of student loans, divorce settlements, or a particular business structure that affects their loan ratios. We have also had first time buyers find out they can actually afford their dream home based on their financial condition. In today's mortgage climate, even more of these individual financial elements will come into play. Nothing is worse than falling in love with a property, only to find out that it's way beyond your loan ability, or to underestimate your buying ability only to find out your dream home is just around the corner.
Wait! The only thing worse than that is writing the offer, planning your closing and finding out that you can't qualify. That's worse!
"We don't want to start that part of the process, we just want to start looking"
See the two reasons above.
Please understand, we aren't trying to kill your enthusiasm, but the process of prequalification is so easy with a good, local, qualified mortgage professional that there is no reason not to have this part out of the way before you start actually looking at homes.
"I'll get prequalified when I find the right house"
There may not be time. We see this happen...all the time. You find the perfect house, you then start the prequalification process...by the time you get your letter in order to have a powerful offer - the home sells to someone else. Why? Sellers will usually require that a prequalification or full approval letter accompany an offer. Why? You have indicated you want their home, but you haven't proven you can actually pay for it. The next buyer has proven they can pay for it and so the seller will most likely take the offer that comes as a complete package. This home buying process is a business transaction, the better the package, the better the negotiations.
Next in our series - "Why do you always ask if I'm working with a Broker?"
"Why do you always ask if I'm prequalified?"
Let's see, you call on a property and ask to see a home that you find on the Internet, or drive by - and the broker will ask you "are you prequalified"? While it probably feels like an invasion of your privacy or too picky-uney - here's why you are being asked:
When we, as real estate professionals, list a property, very often one of the items that we go over with the seller is that we are making sure that the security of the property is on the top of our priority list...we make sure that the alarm codes are kept private, and that the home will be secured after a showing. During these discussions a seller will almost always ask "can you make sure that the buyers are prequalified, and not just lookie loos"? It takes quite a bit of effort for a seller to get ready for a home showing. A seller must rearrange their day, do double duty on the staging of their home and have to be gone from their property while the showing is taking place. The sellers want to make sure that the buyer looking at their home isn't just curious about the decorating, or doesn't really have the ability to buy the property if they fall in love with it.
"But I've looked on-line and the on-line form says I can afford it"
These on-line mortgage forms, they are so easy! You fill them out and all they are asking for is income, debts, and voila....it spits out a purchase price and interest rate....but that's only one layer of the prequalification process. Things such as business settlements, divorce settlements, tax filings, etc - can all affect how your mortgage process is really going to behave once you put it into play. We have seen very high income buyers not be able to get a mortgage because of student loans, divorce settlements, or a particular business structure that affects their loan ratios. We have also had first time buyers find out they can actually afford their dream home based on their financial condition. In today's mortgage climate, even more of these individual financial elements will come into play. Nothing is worse than falling in love with a property, only to find out that it's way beyond your loan ability, or to underestimate your buying ability only to find out your dream home is just around the corner.
Wait! The only thing worse than that is writing the offer, planning your closing and finding out that you can't qualify. That's worse!
"We don't want to start that part of the process, we just want to start looking"
See the two reasons above.
Please understand, we aren't trying to kill your enthusiasm, but the process of prequalification is so easy with a good, local, qualified mortgage professional that there is no reason not to have this part out of the way before you start actually looking at homes.
"I'll get prequalified when I find the right house"
There may not be time. We see this happen...all the time. You find the perfect house, you then start the prequalification process...by the time you get your letter in order to have a powerful offer - the home sells to someone else. Why? Sellers will usually require that a prequalification or full approval letter accompany an offer. Why? You have indicated you want their home, but you haven't proven you can actually pay for it. The next buyer has proven they can pay for it and so the seller will most likely take the offer that comes as a complete package. This home buying process is a business transaction, the better the package, the better the negotiations.
Next in our series - "Why do you always ask if I'm working with a Broker?"
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