Murfreesboro Real Estate

Buyers and Sellers often times are confused as to what Lender terms and descriptions really mean (PreQualified, etc).  Why is it important to know the difference?

If you’re a Buyer, you should know that none of the above statuses guarantees that you will obtain loan approval and close a real estate transaction.  For example, to get PreQualified, one only has to call a Lender and after describing income and debts over the phone, the Loan Officer can convey a ballpark estimate of a Buyer’s maximum purchasing power.  Most Lenders prequalify Buyers for free.  This step, at a minimum, is recommended to better ensure that a Buyer is in the right purchase price range that their income would likely support.

A PreApproval step is even better and more reassuring for all, as the Buyer will have had to have submitted documentation and will have their income, credit, and assets all verified.  Typically, a specific loan amount and type will be cited by the Loan Officer.  Again, this step often times is provided at no charge by the Lender and is a highly recommended action to take prior to submission of an Offer to Purchase.

A Loan Commitment is the strongest position that a Buyer can expect to attain through a Lender.  Typically, a conditional commitment letter will be generated 20 days following a contract’s Binding Agreement Date.  That time frame allows ample time to confirm that an appraisal has been ordered, the Buyer has the funds to close, the Buyer’s credit is deemed acceptable to their Lender, and the Buyer has the employment and income necessary to obtain said loan.  It should be noted, however, that even this step is not a guarantee that a Buyer will obtain loan approval.

What could go wrong, you may ask?  Well, many things, such as:  an Underwriter who pulls a final credit report the morning of closing discovers that a Service Provider reported a “slow payment.” Or, a first time home buyer, who became so excited about the prospect of closing on their first home, subsequently purchased $10,000 worth of furniture on their credit card… Oops, the Buyer “forgot” that Underwriters will undergo a final check of their debt to income ratios immediately before closing.  More often, one sees instances where the formally “Solid Buyer” suddenly gets laid off or otherwise experiences a reduction in income (sometimes by occupational injury, illness, etc).

Let me help you (or those you refer to me) through the entire real estate process.