For the most part, prequal letters from a lender or mortgage broker are useless, but sellers' agents in Sacramento insist that the buyer's agent include a prequal letter with a purchase offer. They want to see that the buyer is qualified to purchase the property and has at least taken the step to talk to a lender. But the letters themselves don't guarantee that the buyer will get a loan.
If you want to give a Sacramento home seller ammunition to reject your purchase offer, here are three things you can do to mess it up:
Choose an out-of-area lender. There is nothing inherently wrong with an out-of-area mortgage broker, but listing agents typically don't know the lender nor its performance record and, let's face it, there are a lot of shaky mortgage brokers practicing. Listing agents and their sellers don't want to see the transaction fall apart because the buyer tried to get a loan from a lender who could not perform.
Submit a prequal letter instead of a preapproval letter. A prequal letter says the lender has taken a loan application. A loan preapproval letter says the lender has obtained the buyer's credit report, approved it, ran it through actual or desktop underwriting and reviewed the buyer's documentation. It speaks volumes.
Attach a loan letter that shows the buyer is qualified to pay more than the asking price of the home. Nothing says to the seller: "Let's issue a counter for a higher price" faster. In fact, the mortgage broker I work with emails me the preapproval letter in a Word format so I can immediately lower the price, if necessary, before submitting the offer.
I always suggest that my buyers compare rates and terms among lenders, although I have no stake in the lender the buyer ultimately chooses. That's the buyer's decision to make. But I do want to submit the buyers' offer in the strongest light possible, and that means submitting a preapproval letter (not a prequal) with their offer.
If your lender can't or won't issue a preapproval letter, then you might want to look for a lender who will. Don't sabotage your efforts to buy a home by choosing the wrong lender.
Photo: Evelyne Jamet at Vitek Mortgage, by Elizabeth Weintraub
The Short Sale Savior, by Elizabeth Weintraub, coming from Archer Ellison in January 2009.
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Elizabeth Weintraub is an author, home buying columnist for The New York Times-owned About.com, a Land Park resident, and a Land Park real estate agent who specializes in older, classic homes in Land Park, Curtis Park, Midtown and East Sacramento. Weintraub is also a Sacramento Short Sale agent who lists and successfully sells short sales throughout Sacramento. Call Elizabeth Weintraub at 916.233.6759. Put 35 years of real estate experience to work for you. DRE License # 00697006.
The Short Sale Savior, by Elizabeth Weintraub, available through bookstores everywhere and at Amazon.com.
Photo: Unless otherwise noted in this blog, the photo is copyrighted by Big Stock Photo and used with permission.
The views expressed herein are Weintraub's personal views and do not reflect the views of Lyon Real Estate.
