Profile picture for fancygait

should i accept an offer on my house with a pre qualified letter

  • October 12 2013 - US
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Answers (8)

The #1 reason that sales fail to go through is that the buyer doesn't get the loan. In most of these cases the buyer had a prequal letter.

Though often used interchangeably, there is a difference between pre-qualified and pre-approved:

Pre-qualified means that the buyer and lender had a conversation and based on the conversation, the buyer should be able to get a specific loan.

Pre-approved means that the lender ran the buyers credit and reviewed supporting paperwork for income and debt. A pre-approval will be contingent on the property appraising for at least the sale price, be in a condition approved by the lender (FHA/VA loans have more stringent conditions) and having clear title.

In my area, after the years of bank involvement in approving a sale, it is now required that the buyer submit a preapproval letter from a direct lender and proof of funds to close (bank statement) with their offer.

A Real Estate loan is one of the most detailed and prone to fail. How solid a Loan Approval is has a lot to do with the experience and knowledge of the one issuing the preapproval. Underwriters will be the ones making the decisions, so often a preapproval by an underwriter will be requested before any offer acceptance.

Before accepting an offer, if you don't have an agent, call the lender on the letter and ask if they ran FICO scores and processed paperwork. It also might be helpful to see if the lender is a full time lender and how long they've been doing loans.
  • October 14 2013
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It is absolutely not the best idea to accept offers with a pre-qualification letter from the lender.  There is a difference in a pre-qual letter versus a pre-approval letter.  Make sure your buyer is pre-approved with conditions only being required is a satisfactory appraisal on the home if possible.  That will put you in a much better position indeed. 
  • October 14 2013
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All Realtors who are really working their hardest for their buyer will want them to have a pre-qualification letter to pre-sent with an offer.  This won't be the final say on it the loan will go through, however it may save wasted time and effort for both buyer and seller.  It will also make your offer that much stronger than one without it.
  • October 14 2013
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All buyers should come to your home with a letter of pre-qualification. I don't know if this particular buyer is presenting a good offer though. Hard to say from so far away! Talk to your Realtor and get their advice.
  • October 14 2013
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Profile picture for CallTheSisters
The pre-quals I get are after the lender has pulled the credit.  No sense wasting time if the person has a 400 score.

Consult with your Realtor and see what their opinion is.  The Realtor may have a working relationship with the lender. 

It is highly unlikely the lender will volunteer any confidential information about the prospective borrower so I would not waste my time calling.  The lender put in writing what they were willing to share.
  • October 12 2013
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Profile picture for Daniel Mirea
Prequalification is an unofficial estimate of how much house a client can afford.  Lenders will not generally pull the credit report during this evaluation. They will calculate the debt-to-income ratio and write  a letter of prequalification stating how much a person should be able to borrow. This process is usually free, but it does not give any real credibility with lenders or sellers. The prequalification is based on vague figures and does not take into account all the financial factors. 

Pre-approval on the other hand really carries a lot of weight in the mortgage and real estate industry. In order to be pre-approved for a loan the client has to sit down with a preferred lender and provide them with documents such as tax returns, bank statements, and business licenses among others. Lenders will analyze these and other information gained by calling the client's  employer and pulling the credit report. 

Bottom line ....tell the buyer or your agent (if you have one) "bring a pre-approval and we have a deal" If he/she qualifies should not be any headache !

Now is a Pre-approval a guarantee that you will close ? NO. 

Good Luck to you!
  • October 12 2013
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Profile picture for Rada Ann Labe
Hi!  Sounds like you're not using a realtor.  You should check out who wrote the prequel letter, and hopefully it is a bona fide mortgage company.  Plus there are a few different types of prequel letters, the least is where they only check your credit score, but do not verify income.   When you accept an offer, even with the contingencies - like loan contingency, etc- if it doesn't work out and you want to back out, then you will need both signatures - seller and prospective buyer in order to release any deposit back to the buyer and to be able to accept another offer on your home.  Usually it goes very smoothly, but there are a lot of legal issues you shld be aware of.  Good luck.  And if you're in this area, please give me a call. 
  • October 12 2013
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That's debatable. Are you using a Realtor?  Is the Lender local? If so, you could call them to verify.
  • October 12 2013
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