So, you’ve run the numbers, applied for your mortgage, and … you’re now qualified to borrow a large sum of money! What’s the next step?
Well, assuming your bank is on the up-and-up, having that qualification letter in hand does two very important things: It lets real estate agents and home-sellers know you’re serious about your home search, and it gives you a budget to work with before you walk into breathtaking brick Tudor with the pool.
Let’s be serious. Let’s say you’re qualified to borrow up to $300,000 and you find a great place you really like that’s listed under that. You put in an offer, along with seven other prospective buyers. When the seller and their agent see that a bank has already put its “yes” on the table, it puts your offer at the top of their stack because they won’t have to worry about your offer falling through. It also gives you peace of mind as you wonder about how you stack up against other buyers.
Budgets mean bliss. In hot markets, homes can sell faster than you can blink. When the top five houses in your price range get pulled out from beneath you, the temptation can be to shop outside your price range. With a qualification letter for a certain amount, you head into the process knowing what your bank is willing to lend. End of discussion. Don’t worry—the right home will come. It just might take longer than you wanted.
Getting that letter is key. If a bank is willing to give you that qualification letter, you can be well on your way to an easier home-buying process.