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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