With banks becoming even tighter on their financing criteria, many Parkland sellers and their real estate agents MUST make sure that buyers are truly qualified to purchase a home before entering into a purchase agreement.
Prequalification is the process where a lender or mortgage broker pulls credit and looks at the complete credit report of the borrower, as well as the buyer’s income and debts. As a result, a lender will be able to use this pertinent information to determine how much mortgage the potential purchaser can really afford. But, there is no bank accounts or employment verified during the prequalification process.
Preapproval occurs when ALL employment and credit is verified and approved by the lender or mortgage broker. During the preapproval process, the potential buyer provides more detailed information in order to verify their statements. After this information is verified, then the mortgage is approved, subject to a home appraisal. The final loan is approved after the property appraises, and the bank receives all documentation and satisifes the contingencies and conditions of the loan before closing.
It is important for all sellers and Realtors to understand that a prequalification letter does not mean that a buyer is 100% able to purchase the said property. When receiving offers on our Parkland property listings, we ask that ALL buyers are preapproved for a loan. I really do not understand why a buyer would not make sure that they are truly approved to purchase a property in a particular price range and understand their exact terms and conditions of the loan. As a result, the “prequalification letter” is just a piece of paper. I want the preapproval letter and still have questions from the buyer’s mortgage lender before I even present the offer to my sellers!
The moral of the story is that with the lending institutions tightening their financing criterias, it is essential that all buyers get preapproved before looking at properties or at least before submitting a formal offer!
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If you are interested in buying or selling a real estate property in Parkland, please give us a call at 954-609-0591 or send a note to the squawk.