SELLERS SHOULD BE
PRE-APPROVED TOO!
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.
While home values continue appreciating and interest rates remain low, 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 $15-$18 cost
(at most lenders) can be a great investment for the seller's peace of mind.
Humboldt Home Loans will obtain a credit report at no charge to a borrower when
a loan file is opened.
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
introduction of the "easy qualifier" and the "no income-no asset
verification" (NIV) loans make people believe that with 25% or more down
payment anyone can acquire a loan. It pays to be careful.
The borrower, even with lots of cash and using an "easy qualifier"
or NIV type loan typically 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. Additionally, property standards are typically very strict with
these unique loan programs, sometimes called "niche" products. They
often are not the most competitive in rates and fees and can result in
disappointment when discovered, at the last minute, that they are the only loan
program available.
Thus, it is advised that sellers determine in advance all of the loan
alternatives available and make certain that they will be able to purchase that
next home of their dreams. With the new Direct 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.
Web page/seller preapprove