Why Should a Home Buyer Get Pre-Qualified?
Making an offer on a home without a pre-qualification is similar to showing up on the first day of football tryouts with no shoes, pads or helmet. Not only would you look unprepared for what is coming, you would be communicating to the other players and coaches that they don't understand what is about to happen.
The same is true when buying a home. A buyer needs to show they are ready by getting a pre-qualification. Furthermore, the agents and sellers will see the pre-qualification as proof the buyer is ready. A pre-qualification is the buyers’ best evidence they are prepared and capable.
Is the pre-qualification process difficult?
The pre-qualification process is extremely easy on the buyer. Historically, the application process was time consuming and inconvenient for the prospective buyer. However, most home lenders today offer a streamlined online application process.
Fortunately, there is no need for the pre-qualification process to be anything other than quick and easy.
A buyer can expect to spend 10-15 minutes completing the online application. After applying, the buyer should hear back within a single business day.
What documents are needed to get a pre-qualification?
Every person's financial situation is unique. However, there is some necessary information required for a buyer to get a pre-qualification decision.
Generally, a prospective buyer will need to provide proof of income and a social security number to get a pre-qualification
The proof of income is usually provided via a W-2 and the last two paycheck stubs.
A valid social security number will be used to obtain a current credit report so the pre-qualification reflects the most accurate information of the buyer.
What is the benefit of getting pre-qualified?
Every offer to purchase a home is an audition for the seller. A pre-qualification is the best way to stand out. This is true for several reasons.
First, a pre-qualification makes the seller take the offer more seriously. When a buyer makes a pre-qualified offer, the seller can be much more confident the seller can actually afford the home. That means the seller can be more comfortable knowing the buyer is much more likely to close and complete the transaction.
Sellers want their deal to contain as little risk as possible. A pre-qualification gives the seller an extra boost of confidence the deal will go through as planned.
Next, the pre-qualification also gives the buyer a more informed strategy to research and shop for their next home. Often, a buyer is guessing what price points are affordable, but a pre-qualification can give them a more full range of options.
Lastly, a pre-qualification gives a buyer a competitive advantage. The pre-qualification shows the buyer has completed important work ahead of time and is going the extra mile to be prepared to get a seller where they want to be.
The more competitive the real estate market, the more important it is for a buyer to be pre-qualified.
Does a pre-qualification mean a buyer is guaranteed to get the loan?
While a pre-qualification is an important step in showing credit worthiness, it is not the same as a guarantee that the loan will close. There are a few reasons for this:
First, the most common reason a pre-qualified buyer is not able to get the loan is they failed to disclose accurate information in their application. An undisclosed liability or income that is actually lower than reported can spell trouble for a pre-qualified buyer.
A full and accurate application makes a buyer's pre-qualification the best it can be.
Next, an unexpected change in a buyer's credit can make the pre-qualification invalid. A new debt is one of the most common reasons for a negative credit change.
Lastly, the market changes. Loan rates fluctuate. From time to time, an unexpected market change impacts applicable rates and can invalidate the pre-qualification.
How does a buyer get pre-qualified?
A home buyer gets pre-qualified by working with a qualified mortgage professional.
The Garner Loan Team is a top 1% producer and can help a buyer get pre-qualified today.