Saturday, November 19, 2011

Get Preapproved? Prequalified?

Get pre-approved, pre-qualified, who me? Why should I? Do you think I would misrepresent my buying power? You're the third REALTOR who's asked me that.

Well those other two didn't explain pre-approval. Pre-approval, and I'm using this interchangeably with pre-qualification, is a good thing. It enables you the client and me the REALTOR. Right this minute I've got three potential buyers on the fence. I'm writing this for them because they evaporated when I asked them about finances. I'm the REALTOR so finances are none of my business, right?


As your Buyer's Agent I am your hired professional. I'm getting paid to represent you and if you don't have any money, and you don't have any credit, then you can't buy a house, period. I can't help you; I can only hurt you.

Here's why I am telling you to get pre-approved:

1. I need to know what our price range is so I can find and show you homes you could buy, not more home, or less home (unless that's what you want), but just the right home.

2. I need to know if there are any smudges on your credit report we could be working on now to get you a better rate on interest later.

3. I need to know when we present an offer that we're presenting a strong offer, and you need to know pre-approval could help you win the house in a multiple offer situation.

4. I need to know who we'll be working with. We need a mortgage officer who can tell you exactly what interest rate you qualify for, can give you numbers, explain PITI (Principle, Interest, Taxes, Insurance) and tell you what your payments will be at your price point.

5. I need to know what mortgage options are available to you. Looking for a home that qualifies under FHA is different than a home that's going to qualify for VA, and the FHA and the VA change their requirements, not as often as Adobe upgrades their reader, but often enough.

6. I need to know you're qualified to buy a house BEFORE I put you in my car and drive you all over the 566 square mile Rutherford County to look for the perfect place and THEN find out you have a little credit problem. I am a self-employed business person. It's my money going in the gas tank. If you're honest and tell me Maybe Someday you'll buy a house, then Maybe Someday I'll take you out to look at houses. Sometimes I preview homes, and I like to have company when I'm going to look at vacant properties.

I want to help you buy the most house for the least money. I want to help you get into a home that can be a tax shelter as well as a family shelter for years to come, so get pre-approved, will ya?

Here's the harsh reality.

Champagne taste on a beer budget - ever heard that? You want to see houses you can't afford - maybe you'll make an offer and get a $200,000 house for $75,000 - really? It does happen, but you should know one of the stipulations on making an offer on a deal like this is "Proof of Funds" that has to go in with the offer.

You just need a cheap fixer-upper because you're handy and so are your friends/family members, but you don't have any money. And about this, I am sorry, but banks only loan money to investors on fixer-uppers. They loan money to people who have money. Banks aren't going to take a chance on you. I hate it - but unless you've got a wealthy friend of family member who'll front you the money you're out of options. Banks aren't going to loan money on anything but a move-in ready house, because if you miss a payment they want a house that's move-out and re-sale ready.

You've got credit problems? I can't solve them for you, but I can help.

Owning a home has long been called The American Dream. Helping you find a home, putting you in a home, well that's my dream. When you walk into a house and say: This is it - I get goosebumps. And after you move in I nod my head when I drive by and feel good. This is a real feel-good business.

But when you fall in love with a house, and I can't help you get it, then I feel bad, and you feel bad, and the seller feels bad, and their agent feels bad and it's bad.

What's worse? When I drive by your house and know you're losing it. Boy do I feel bad. Even after you move out, when I drive by that house, I feel bad. If you get in trouble, I will help you any way I can. I can not make your payments, but I'll list your house, and help you make a plan, and give you boxes if have to move out. And that's really bad....

Listen, the last thing I want to do is to help you get more house than you can afford. So do yourself and me a favor. Get pre-approval/pre-qualified.

Get preapproved. It's a good thing.

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