Before you start taking that new client around to see properties — actually, before you even take them on as a client — you should be sure they've been pre-approved or pre-qualified by a trustworthy mortgage lender. Here's why.
You’ll know which clients are serious about buying a new home and can be sure you’re focusing your time and energy on hot homebuyers who will qualify for a loan.
You’ll know how much they can spend. Pre-approval or pre-qualification will give your clients a budget to work within and determine the price range of homes you should be showing them.
Your client will have an advantage over other buyers. With a pre-approval, I’ll provide you with a letter that you can include with your offer on the home. It shows that your client is serious and can qualify for a home mortgage.*
A pre-qualification is really just an estimate of how much money a homebuyer might be able to secure for a home loan. I may be able to pre-qualify your client over the phone, as I will just run a quick check on their finances and come up with a figure that we would probably agree to loan them. This can get you out the door and on to homeshopping quickly.
With a pre-approval, it means that the client will be approved for the loan subject to certain conditions. With pre-approval, I'll need to review a number of documents, the client's income and finances will be reviewed and verified, and I'll run a full credit check.
Documents I'll need for pre-approval include:
Driver's license or government-issued ID
W-2 or 1099 statements for the last two years
The past two months' statements for all bank accounts
The two most recent pay stubs or income verification from clients
The most recent statements from retirement accounts, such as IRAs and 401(k)s
Statements for any stocks or other investment accounts
Note that while pre-approval means the client will be approved for the loan*, certain factors, such as changes to their credit report or income prior to closing, could jeopardize the loan approval.
Other circumstances can affect my ability to fund their new home purchase as well, such as the results of the home appraisal and inspections and proper insurance and titling. A client may be approved for the loan, but the property itself must also be approved by my company. If you have any questions about this step in homebuying, please contact me for a thorough explanation.
Getting your clients vetted by a professional mortgage lender will save you time, and in our line of work, time is money. I can help you determine whether pre-approval or pre-qualification is the best option for your clients and start the process immediately with any homeshoppers you send my way!
I'd love to help your clients get pre-qualified or pre-approved. Let's work together to deliver an excellent homebuying experience and grow our businesses!
*Subject to certain conditions.