It always humours me when I’m dealing with a newer client and when I ask them if they’ve been to the bank or have talked to a mortgage broker, most all seem to get defensive…like, “Of course I have the money!” Maybe it’s my approach.It seems to me in that moment that either the buyer thinks that the question
is too personal, over the top and not part of the real estate equation or that I’ve picked them out of a crowd and questioning their self worth. It’s a question I HAVE to ask and need to know for many reasons. It IS part of the real estate equation and a big part of it. It’s the deciding factor, the guts, the know all. And it’s not about whether or not you can afford it, it’s about how much the bank is prepared to lend you, at what rate and for what type of building.
Real estate agents need to know if you’ve been pre-approved for these reasons:
- To help facilitate the house buying
- It shows how serious you are
- It helps with the negotiations when the time comes (can make or break some deals and will certainly give you the edge in multiple offer situations)
- It’s faster to get the mortgage approved, now that the bank knows you and has all your information on hand
- It can lock in a lower rate if the rates do go up
- If you need that extra $5000 to negotiate with, you know it’s there
- AND now you know…no more guessing
Writing the offer
Something you might not know as a buyer is that when the offer is written, the realtor will be filling out a mandatory Annex A, which is all about the financial part of the deal. On it it will state how much of a deposit you will put down, the mortgage amount, the interest rate, the term and amortization length. Your realtor will also be calling the banker or mortgage broker when the offer has been accepted to pass on all the necessary paperwork. Also, since getting the mortgage is on a short timeline, your realtor should be on top of things, making sure there aren’t any delays. If there is a time delay, it just might not sit well with the seller and your deal could lapse.
So the next time you want to start working with a realtor…just remember, there aren’t anymore financial secrets.