This week I had an experience with a buyer who had "pre-approval" from a lender for a mortgage. We proceeded with an offer on a home based on this and then discovered a few things....
I discovered that a pre-approval is often based on unverified information, provided by the borrower/ buyer. Usually, once an offer is accepted and the buyer goes back to their lender for approval, things go smoothly and the mortgage is obtained.
In the case of my client however, a portion of her income was from an ex-spouse. Since there was no Separation Agreement and legally the payments could stop at any time, the lender was very apprehensive in using this income to qualify her for a mortgage. Since the average person does not know the 'rules' of borrowing, to proceed with an offer based on a pre-approval can lead to offering too much for a property, looking at a home that one cannot afford or simply being disappointed to find out you didn't qualify in the first place. My client sold her home unconditionally on the basis of this pre-approval since the pre-approval gave her the confidence to proceed with purchasing another home.
Consumers today are savvy and have done their homework and almost everyone I work with has already gone to their bank or mortgage broker and obtained a pre-approval. I would suggest going one step further and providing them with what is required to turn that "pre-approval" into an unconditional approval. The only thing that should be left for them to approve is the house by way of ordering an appraisal.
If you'd like to find out how much you're approved for, please call me at 250-549-2103 and I will help you purchase a home with confidence with a referral to a professional lender who can provide you with an APPROVAL!