There is another reality to signing a contract offer and selling a home. The majority of home buyers need to obtain a mortgage loan to purchase a home and need mortgage approval from their lender to complete the purchase!
In previous posts on this topic, “You Signed a Contract Offer to Sell Your Home, Attorney Review” and the “Home Inspection Process” was reviewed.
Why does a home seller need to be concerned about the Mortgage Approval process, the buyer provided a mortgage Pre-Qualification letter, didn’t they? There are two important aspects here that matter. One is the buyer’s financial qualifications to obtain the mortgage desired and the other is the lender’s appraisal of the home.
First of all, there is a difference between a buyer a mortgage pre qualification letter from a lender as compared to obtaining mortgage pre approval. The most important difference is that in the pre approval the buyer’s financial information, such as income and assets, was verified rather than just verbal communication. Read more on Mortgage Pre Qualification versus Mortgage Pre Approval.
The contract of sale provides a mortgage contingency date. That is the date the buyer needs to obtain mortgage approval by. In order to obtain mortgage approval by the date specified in the contract of sale or in the revised date of the Attorney Review addendum, the buyer must be diligent in submitting their formal mortgage application and be very diligent in providing the necessary documents the lender requires in order to meet that date. And yes, there are numerous transactions where the mortgage contingency date needs to extended.
There are times when a buyer does not submit their mortgage application until the home inspection is done and all repairs are negotiated. Sometimes that can take a week to two weeks. There are also instances where the lender requires explanations from the buyer on items which appear in the credit report. That could take time. Delays like this affect the timeliness of obtaining mortgage approval.
The lender’s appraisal of the home is extremely important. Buyers want to know that the home is worth what they are paying. Appraisers rely on comparable sales to establish value. Under appraisals are a concern in obtaining mortgage approval for a buyer and in most transactions a concern for the seller as well.
A home seller needs to rely on their listing agent to be attentive in monitoring the progress of the real estate transaction. The listing agent can obtain verification that the mortgage application was submitted by the buyer. The listing agent can arrange to meet the appraiser for the appraisal, and provide comparable sales information and other pertinent information.
You Signed a Real Estate Contract Offer to Sell Your Home, The Home Inspection_Part II
The above article,“You Signed a Contract Offer to Sell Your Home, Mortgage Approval”, was written by David Fialk, REALTOR, Broker Owner, Choice Realty Co., Iselin, New Jersey and regularly posts real estate articles of interest for home buyers, home sellers and home owners.
Licensed since 1971, David has helped over 1800 families move across town, across the state and across the country and specializes in the towns of Iselin, Colonia, Edison, Woodbridge, Avenel, Fords, Sewaren, Port Reading, Keasbey, Carteret and Metuchen in Middlesex County, New Jersey.
Planning on purchasing real estate? Thinking of selling your home? For real estate information ”You Can Rely On, Contact the REALTOR You Can Rely On”.