Buyers, Strengthen Your Purchasing Position

There are two well-advised but often overlooked steps in the property search process that can help buyers operate from a position of strength. An all-cash buyer is, of course, the person a seller wants to see walk through their door, but a buyer who has gone through the process of becoming pre-qualified or pre-approved is also very welcome to sellers and realtors alike.

All lenders are able to pre-qualify and pre-approve buyers, be it a bank, credit union, private lender or mortgage company. The process for a buyer to pre-qualify may take a little time and effort on their part, but all that homework pays off in the long run. The pre-approval process is more involved because the buyer is actually applying for a mortgage.

The benefit of becoming pre-qualified or pre-approved is two-fold. Once a buyer has gone through either process, it’s time for the realtor and buyer to sit down and take a look at listings. Since the buyer has already been pre-qualified and knowshis budget parameters or has been pre-approved and knows down to dollars and cents, this saves a lot of time and energy on everyone’s part. The realtor can now focus on showing properties that the buyer can actually afford to purchase.

Here’s how the pre-qualification process works:

Pre-qualification is the easiest method. It can be done over the phone or even on the internet. The lender just needs some basic financial information, such as income, debt and assets. (This is actually the first step in the pre-approval process as well) The lender can then give the buyer a ball-park figure to work with when house-hunting. This process does not guarantee a mortgage, it only gives the buyer an idea of what his parameters are prior to applying for a mortgage.

Here’s how the pre-approval process works:

The pre-approval process requires more “homework” for the buyer as it is the level above pre-qualifying. For this level, the lender will consider personal financial information, credit standing, tax documents, W-2’s and/or other types of documentation. Once the lender has all this information, they will run it through several programs to determine eligibility. Once this process has been completed, the buyer will know a specific amount he can spend on a home-purchase.

To summarize, a buyer can enhance his purchasing power by taking the time and effort to either get pre-qualified or pre-approved by a lender. By doing either, buyers and sellers alike can confidently enter and finalize the real estate transaction process.

By Gayle Conyers, Real Estate Associate Silver Peaks Realty.

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