By Mike Bodeen · 19 July 2014
When asked by folks about the most important step in the home buying process, aside from the Realtor selection, without question, the most important strategy a buyer can make is to get themselves money ready.
As soon as you begin thinking about buying a home, hopefully the next thought is, “Call Mike!” Well, ok, if for some reason that can’t be the case, then you should call your lender. (See Selecting Your Professionals) Having the “right” lender in your corner is HUGE!
The “right” lender is going to answer the question almost everyone involved in your transaction wants to know: Are you qualified to buy a home? You will hear the admonition “Get Pre-Qualified.”
As Realtor professionals, we want to make sure we’re not spinning everyone’s wheels, especially our own.
The strongest Buyer Positions
1. Cash Ready (meaning you can withdraw or wire the funds at closing)
2. Pre-Approved, No Contingency
3. Pre-Qualified, No Contingency
4. Pre-Approved, Contingency (usually to sell a home)
Okay, so what’s the difference between being pre-approved and being pre-qualified? Are we just talking semantics here or what?
Far from it. Pre-approved is going through the entire loan process, minus finding the house. Therefore, after completing the loan process, you only need to find a house that qualifies based on the lender’s appraisal. This can make a big difference when negotiating with a seller and their agent, especially if there are multiple offers. In a multiple offer scenario, the preapproved buyer rises to the top over everyone else, except the cash buyer.
Pre-Qualified (in Arizona this form is known as the “PQF” (Pre=Qual-Form) This AAR (Arizona Association of Realtors) form is one that has been completed by a lender to show that based on a limited review of the buyer’s financial situation, the buyer will qualify for a certain loan/payment amount. This form is required to be supplied to the Seller within 5 days of Seller’s acceptance, but few sellers in their right mind will accept an offer without one accompanying the contract