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From the Jersey Shore: an Olympic Lesson

 
There’s an old saying: “A bird in the hand is worth two in the bush.”  Personally, if I’m being honest, I believe the bird in the hand is worth a lot more than the two in the bush because, let’s be honest, we have no idea what those birds are doing in the bush and whether they’ve been taking care of themselves (working out and eating a healthy diet v. binge watching “Jersey Shore” and eating gluten).  I’ll just add this to the old saying: “But one that’s been plucked, roasted, and served up on a silver platter is worth the most.”  

When submitting an offer on a house, there are generally three types of offers:
1.  Based on a pre-qualification (two in the bush)
2.  Cash (bird in the hand)
3.  Based on a qualified approval (plucked, roasted, and served)
 
Let me describe how the seller sees each type of offer (using “Jersey Shore” as my backdrop):
1.  Based on a pre-qualification: the buyer is basically saying, “C’mon.  You can trust me.  I’m good for it.”
2.  Cash: the buyer is saying, “Tree hunnerd is too high, you know.  I got two-fiddy right heah, right now.  Let’s doooo this!”
3.  Based on a qualified approval: “Here’s a cashier’s check for your asking price.”

Allow me explain and define a Qualified Approval.  Underwriting a home loan is made up of two major parts: the home and the borrower(s).  Most people overestimate the amount of information needed regarding the “home” portion. In reality, all that’s required is Title Work, an Appraisal, an Inspection, and a Contract – very minimal but very important.  However, those are all things that have to be done with limited involvement from the borrower. 

The “borrower” portion can be complicated, taking Underwriters down a road full of twists and turns, which translates into time. We are required to verify current income, job history, credit scores, any negative credit history, rent history, large deposits, and the list goes on.  By doing all of this up front to obtain a Qualified Approval, we can issue you an “all clear” to show the potential Seller that you, the Borrower, are fully underwritten and ready to purchase their home – this gets your home loan 85% complete before you even start looking for and finding the house of your dreams.

Going the Qualified Approval route is like Usain Bolt’s journey to his first gold medal.  The actual race that won him that medal sped by in mere seconds, but he spent THOUSANDS OF HOURS preparing for the moment he would have his chance to run THAT ONE RACE.  It paid off, right?  THAT is the essence of a Qualified Approval.  Getting a pre-qualification is like starting the race with your eye on the prize and being held up in the middle while the officials decide if you’re qualified – and you’re forced to watch someone else claim what you’ve wanted for so long.  At that point, the only bird you’re eating is crow.  Ouch!

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