New national research shows that many buyers and homesellers are kidding themselves when it comes to a very important step in the home buying or selling process: loan preapprovals! Be aware of the fact that many preapproval letters are not worth the paper they are printed on!
Kenneth Harney, a syndicated columnist,writes “More than half of the participants in a nationally representative statistical sample of realty agents identified unreliable or bogus preapproval letters as a key cause of breakdowns in transactions. The agents said 39 percent of all preapprovals by Internet-based lenders were faulty or “invalid.” This is something we definitely see in our industry. One of the biggest obstacles we, as Realtors, must overcome for our clients is the financing piece.
A word to the wise: be cautious if you are a seller about accepting an offer based on a preapproval letter without asking some questions and be cautious if you a buyer when you are determining who will provide your financing. There are so many factors which contribute to the cost of borrowing money. The interest rate is simply one factor. A reputable Realtor should be able to help you at least ask the right questions. If you are planning to sell your home “For Sale By Owner”, be prepared in advance for how you will deal with financing issues your buyer may bring. In order to be truly “prequalified”, the lender should have required some proof of income, a copy of a credit report pulled, and more.
Good luck and happy selling!