Have your Buyers talk to a Lender of your choice.
Most agents are trained not to show any homes without a pre-approval letter from a lender. This makes perfect sense as it’s not in their interest to waste their time, or yours, and show you a dozen homes that are $300,000 when you can only afford $190,000. Additionally, some people don’t have the buying power they think and at the end of the day, are essentially window shopping. Since real estate agents, like us, don’t get paid unless you buy or sell, we can’t really afford to just drive you around window shopping for weeks with no chance of a sale happening.
You need more than a pre-approval from your Lender.
Have your buyer talk to a lender before you begin the home search, we have all learned this the hard way. But you need more than a pre-qual letter from the lender. You want a Pre-Approval Letter. The lender has actually reviewed documents prior to issuing a pre-approval letter. With a pre-approval letter you begin to search for a property. You find the perfect place – then what? You need to write the contract.
Buyer eligibility for a loan is so much more than a pre-approval letter. The buyer has given the lender much more detail into the finances than you as a Real Estate Agent will ever need or want to know. The lender knows how much money the buyer makes, the debt to income ratios and how much the buyer has in liquid funds for their downpayment and closing costs.
You still need even more than the pre-qualification.
You need to ask the lender a series of questions, these answers are necessary for you to write a contract.
* What loan program are we applying for? Conventional, VA, FHA – or is this a Jumbo Loan? Do you know what a Jumbo Loan is?
* What is the interest rate and down payment
* How much time does the lender need for appraisal and financing contingencies?
* What are the anticipated Closing Costs?
Some loan programs require funding fees; the lender may have origination fees you cannot anticipate without asking.
* How much should we ask the seller to pay towards closing?
Before you start the home search get to know the lender, and get to know the particular Financing Contingency you will include in your contract.