The Real Estate Browser Volume 8, Issue 9 | Page 10
10 — Say you saw it in The Real Estate Browser of Lynchburg — Volume 8 Number 9
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The Importance of Having a Pre Qualification Letter
by Dan Vollmer, Associate Broker, ReMax 1st Olympic
I get the opportunity to
work with all types of buyers -
first time home buyers, move
up and downsizing buyers,
retiring and investor buyers. And unless they
are fortunate enough to have cash (or equity) to
make their next move, each of those buyers has
to be ready to finance their new home purchase.
Many buyers are already familiar with the
process - either anecdotally through a friend’s
experience or by going through the process
themselves in a prior purchase. Many buyers,
however, do not realize the need or importance
of speaking with a lender at the outset of their
home search. Sometimes that’s due to a lack of
experience. But just as often I find experienced
home owners who just assume “oh I’ll be able to
get a loan, that won’t be a problem.”
That may not be the case - or at the very least,
should not be considered a foregone conclu-
sion. In every instance where the buyer needs
(or chooses) to finance their home purchase, that
buyer should meet with a lender to discuss their
basic financial picture, and begin the process of
loan approval. That process should begin prior
to setting foot inside the first home.
Why is that so important? A few reasons:
1. If the buyer is unable to qualify at all, any
time spent looking at homes would have
been a wasted effort for both buyer and
agent. If there are financial road blocks
that would prevent the buyer from being
able to qualify, its better to know that
up front. Also, in many cases the road-
block is due to low credit, which can be
improved over time. Knowing what one
needs to do, and having a plan of action
to move towards being able to qualify, is a
much better use of time.
2. If the buyer has search criteria and a list
of wants and needs that do not align with
their price range, they run the risk of not
only falling in love with a home they can-
not afford, but it also sets them up for a
huge disappointment. Looking a homes
that not only meet the buyer’s needs, but
are within an affordable range verified by
a lender, keeps everyone’s expectations in
line. Not to mention, avoiding such dis-
appointment makes for a much happier
home buying experience!
3. Supposing the buyer finds a home they
love, it meets their needs, they assume its
affordable, and they make an offer… the
first question any seller will have is “Are
these buyers approved? Can they make
good on their offer?” Without a pre-qual-
ification letter in hand, not only will most
sellers not be willing to consider or nego-
tiate, the buyer stands the chance of losing
out on the home to another buyer that has
already taken the necessary step.
For these and many other reasons, any seri-
ous buyer will want to meet with a local lender
to begin the process of loan approval. The pre
qualification letter issued by most lenders is
the first step towards ensuring any buyer has
their expectations properly set, their questions
answered, and stands ready to make a solid offer
on the home of their dreams.
Questions, comments, or have an idea for a
future article? Email me at [email protected].