House Hunting During a Pandemic
Money Magazine reports another change some are encountering while searching for a house to buy--a pre-qualification requirement some sellers are putting on their property. Why?
Low mortgage interest rates have brought more home buyers and refinance loan applicants; showing a home open-house style can be problematic in an age of social distancing. Money reports, “...many sellers are trying to limit the number of people traipsing through their properties. To achieve this, real estate agents are suggesting that sellers only admit buyers who have been pre-approved for a mortgage.”
Pre-approval is described as a written offer from a participating lender showing the borrower has been “tentatively approved” for a loan and a potential loan amount.
The pre-approval issue is common in the best of times; it shows a seller you are a serious buyer and not a window shopper. Many borrowers opt for pre-approval as an advantage in the house hunting process. Now, if the Money Magazine report is to be believed, requiring pre-approval could become a requirement in the new normal.
Not a requirement from your lender, to be sure. But if your seller won’t give you the time of day until you get pre-approval, you are better off coming with that document in hand instead of trying to look at homes in hopes that the seller is not “one of those pre-approval people.”
Do you know how to get pre-approved? It can be as simple as filling out an online form to be put in touch with a participating lender who will discuss your needs. When you fill out the form, you will need to have some information ready. That information may include:
- Your estimated credit score
- Estimated down payment
- Estimated property taxes
- Personal assets
- Estimated price range of the home
Pre-approval is not a guarantee that you will be fully approved for the loan, which is why you should not attempt to open new lines of credit in the meantime, don’t skip or miss payments on any financial obligations, etc. Pre-approval can be cancelled, and usually does not last indefinitely.
One thing to keep in mind when dealing with pre-approval issues is that if a seller requires you to present a pre-approval document, they must make that requirement of all borrowers or risk running afoul of Fair Housing Act regulations. If you suspect you are being required to provide a pre-approval letter because of housing discrimination issues, contact the FHA and HUD directly to file a Fair Housing complaint.
The ARM is an FHA Adjustable Rate Mortgage
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