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Updated:         June 4, 2018


We have all heard the saying, "we might not qualify to buy the house we already own". We joke about it, but it can be true. This can be a particular problem for the homeowner who wishes to sell their present home and "move up" to another home.

With home values trending upward and interest rates remaining historically low (in spite of a slight upward trend), it is an excellent time to purchase property. A seller can profit by doing a "move up" transaction via the reinvestment of one's equity. On the other hand, in many cases a seller discovers, too late, that they are unable to qualify for the home they desire to purchase. To avoid this disappointment, a seller can do the following:

Become "pre-approved" (not merely pre-qualified) for the loan they will need.

Complete a loan application and apply for a credit report. The $35 -50 cost (at most lenders) can be a great investment for the seller's peace of mind.

If a seller lists their home for sale prior to pre-approval for their new loan, it is advised that their offer to purchase be made "contingent upon qualifying for a new loan". A buyer may be uncomfortable with this kind of contingency so be prepared to act quickly to remove the requirement.

Consider carefully the process of whether one should "sell first" or "buy first". It can be stressful when trying to do both at the same time.

A seller who will experience considerable equity from a sale can easily be given a false sense of security in feeling that there will be no problem in acquiring a loan with such a large amount of money available for a down payment.

The borrower, even with lots of cash must have excellent credit. In some cases, even the smallest of blemishes can be sufficient for denial of the loan or require higher interest rate and less desirable loan terms. That is why it is recommended that a seller acquire a credit report early in the process . . to avoid unpleasant surprises.

Loans today require a borrower to be “fully documented” to be qualified for the loan. It is the potential buyer’s responsibility to make certain they are capable of qualifying.

Thus, it is advised that sellers determine in advance that there is a loan alternative available that will allow them to purchase that next home of their dreams. With the new Automated Underwriting programs available, a seller can be quickly pre-qualified for a new loan. This results in the seller being able to proceed with the sale of his/her current property without the fear of being disappointed in their future purchase.

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