Case in Point – Pre-Qualification Letters Aren’t All That They’re Cracked Up to Be!

Approve Non-QM Lenders in Charleston

Never before in history have we experienced the type of real estate conditions we are now. The Charleston market is red-hot, and has been for so long that many potential homebuyers are beginning to feel the sting of exhaustion. Due to inventory being at all-time lows, many homes are being spoken for minutes after going on the market. If you are a homebuyer hoping to pull the trigger as soon as your dream home is listed, check out this scenario that our non-QM lender in Charleston recently came across. Don’t fall victim to losing out – get the qualifications you need to get the offer approved.

Pulling the Trigger to Purchase a Retirement Home

An older couple came to see me last week, very disappointed. After saving and scrimping for about two decades, they were ready to pull the trigger and retire in the Holy City. They were not new to the homebuying process, having looked in a particular area for over two years and counting. It isn’t that they were being picky; they just couldn’t find the home that they wanted.

This couple had impeccable credit with scores over 800, and many resources in the bank. They found a perfect home and wanted to make the South their primary home, but still wanted to keep and rent out their home in the Midwest. Buying a home, therefore, was subject to much more scrutiny than a primary residence. And the home’s sale price was upwards of $750k plus, so it was a secondary home with a jumbo loan.

How Could the Seller Refuse?

They had gone with a traditional lender and started the pre-qualification process when they put in their bid. When the house went on the market, within about 2 hours, they had written an offer. The couple loved the home so much and knew it was their perfect retirement home that they offered full price, sight unseen, and thought for sure that the offer would be accepted because the appraised value would probably be less than what the asking price was, but they were willing to make up the difference. With an offer such as that, how could the seller refuse?

A “Stronger” Bid, Although Less, Was Accepted…

Another bid was taken simply because it was a “stronger” one, even though it was lower with a longer closing date. The other offer was taken simply because it came qualified versus their pre-qualifying letter. In the mortgage industry, a little-known fact to many borrowers is that a “pre-qualifying” letter is about as worthless as the paper it is written on. It is not difficult for a lender to skim over your financials and deem you credit-worthy. When you do apply for a full qualification, however, things get real – really quickly.

With a red-hot market like ours experiencing fierce competition, what you bring to the table is critical to getting your offer accepted. If the couple had come to us, we would have surely been able to write them a qualifying letter.

With Our Letter You Get Your Dream House!

So who lost out in this scenario? Both the homebuyer and the home seller. At HomeSpring Mortgage, we understand that the current real estate market is challenging at best and if you compete to buy a home, it doesn’t make sense to not do all that you can to make your offer look more attractive. A full qualifying letter is a bigger hassle (or not with many of our non-QM loan types), but in the end, it’s well worth it. Contact our office to make sure that when you write your offer, it is taken seriously and accepted over the others!