Selling a Home that Failed To Sell Series-Part 18: Can the Buyer Buy?
Cash is king! All of us would love to sell our home for full price to a cash buyer. Imagine it; no financing drama, no appraisal contingency and a quick close! That is the stuff dreams are made of!
While cash deals happen, the vast majority of buyers will need to obtain financing in order to buy your house.
Take a look at this scenario:
You put your house on the market and are quickly made an offer. You are excited and after negotiations are complete, you accept the offer. At this point your home is effectively off the market. Days and weeks go by. It seems like everything is going along smoothly.
As you approach the closing something goes terribly wrong! The buyer finds out that he cannot qualify for the loan! You have wasted weeks not having your home on the market for a qualified buyer!
Fortunately, I can help pre-qualify any prospective buyers. It costs you nothing for me to make sure every buyer who wants to make an offer has been pre-approved for a mortgage. While I am not a loan officer, I connect buyers with financing specialists who help them obtain financing at a competitive rate.
This is a free service. The buyer is under no obligation to use one of my preferred lenders. However, you can rest assured that before any agreement between buyer and seller is made, the buyer must be pre-qualified for the loan.
TYPES OF FINANCING A BUYER COULD USE:
Conventional mortgages typically have a fixed rate of interest, which means that the interest rate does not change throughout the life of the loan. Conventional mortgages or loans or not guaranteed by the federal government and as a result, typically have stricter lending requirements by banks and creditors. conventional mortgages are available through private lenders, such as banks, credit unions, and mortgage companies. However, some conventional mortgages can be guaranteed by two government-sponsored enterprises; the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac).
An FHA loan is a mortgage issued by an FHA-approved lender and insured by the Federal Housing Administration (FHA). Designed for low-to-moderate-income borrowers, FHA loans require a lower minimum down payments and credit scores than many conventional loans.
As of 2020, you can borrow up to 96.5% of the value of a home with an FHA loan.
A VA loan is a mortgage loan available through a program established by the United States Department of Veterans Affairs. The VA sets the qualifying standards, dictates the terms of the mortgages offered and guarantees a portion of the loan, but doesn't actually offer the financing. VA home loans are provided by private lenders, such as banks and mortgage companies, instead.
The terms of VA loans are quite generous, compared to other mortgages and even other federal loan programs. No down payment is mandated unless required by the lender, or if the residence's purchase price is above the established property value. There is no private mortgage insurance premium requirement. Closing costs are limited and may be paid by the seller. The lender may not charge a prepayment penalty if the borrower pays off the loan early. Assistance is available from the VA to help borrowers avoid default.
The bottom line is that any buyer who makes an offer on your home must be qualified to borrow the money needed to buy the property. Getting a loan can be tricky and even a pre-qualified buyer could fail to obtain financing during underwriting. By making sure the buyer is pre-qualified we greatly reduce the risk of being off the market while the buyer fails to obtain financing.
POINTS TO REMEMBER:
Taking a home off the market for a buyer who is not qualified to borrow the money to buy the property is a waste of your time
Getting pre-qualified for a loan is a free service.
Making sure buyers are pre-qualified minimizes risk.