How to Qualify to Buy a Home

It’s a good idea to qualify to buy a home before you draft your offer.  I’ll explain why in this article and provide you with an online resource where you can easily start the process to qualify to buy a home with a simple pre-qualification process.

Qualify to Buy a Home

Before you make an offer, you want to know that you actually can buy your dream home.  That’s the most important reason to qualify to buy a home.  Of course, this only applies if you are financing the purchase.  If you’re paying in cash, you already know you’re qualified.  But there’s another reason to qualify if you will get a loan.  When a seller receives an offer on a home, typically the seller would like at least some indication that the buyer is a qualified buyer, meaning that they either have the cash or that they have sufficient credit and income to qualify to buy a home.  But the seller is not entitled to know information that could compromise the buyer’s negotiating position.  

The simplest way to give the seller some assurance that the offer is legitimate is to include a pre-approval or pre-qualification letter from a mortgage broker when the offer is submitted.  It is also common practice to submit an offer without the letter but to assure the listing agent that the buyer will be providing a pre-approval letter within a few days.  What you don’t want to do as a buyer is make a $300,000 offer on a listing price of $329,000 and attached a pre-qualification letter to your offer that states you are qualified for a $360,000 loan. That would not be a good way to start the negotiations. 

Qualify to Buy a Home:  What Information?

The seller is not entitled to financial qualifications prior to mutual acceptance (a fully signed agreement).  Before acceptance, the seller is not entitled to know how much the buyer qualifies for, which may be more than the offering price. The buyer is not contractually obligated to provide the seller with any proof of qualification, but as a courtesy, it is a good practice to do so with the offer or shortly thereafter.

Here’s where a seller could go wrong:  Demanding proof before showing their home that a buyer is qualified. That could literally turn buyers away so they never even see the home.  In this market, sellers cannot afford to be demanding.  It is not a seller’s market!  But there’s another reason sellers would be unreasonable to insist on assurances that a buyer is pre-qualified before they have even seen the home.  Buyers tell me they often haven’t decided for sure that they want to retire in Sequim or Port Angeles until they’ve had an opportunity to look at the area and at a few homes.  If they see some nice homes and one in particular that could be ideal, that can finalize the decision to make this area their retirement haven.  Until they are ready to make an offer, buyers are not sharing their personal plans and their financial information with anyone, let alone a seller.

As a buyer’s agent, even if I know my buyer’s strength, I will never reveal that to a seller.  I will only reveal that “my buyer is a qualified buyer.”  That’s all a seller will get from me, at least until we have mutual acceptance.  I do not have to and will not explain to a seller or their agent what my “patented” qualification process is. [Obviously, it is not patented, but it is a secret.]  I don’t share my qualification process because it has taken years to develop and it is part of my successful marketing strategy.  Once an offer is accepted by a seller, then a pre-approval or pre-qualification letter is appropriate.  That’s when you ask your mortgage broker to type an updated pre-qualification letter including the amount of the actual purchase, not more, not less.  You never have to reveal to the seller that you actually qualified for a higher price.  That’s confidential information.

If you are considering buying a home in Sequim or Port Angeles, I recommend you do some advance work for yourself and have a pre-qualification letter in your file.  As you start that process with your mortgage broker, if there are some financial issues that need to be cleaned up, he will tell you.  Here is a online link to qualify to buy a home.  This will put you in touch with a highly qualified local mortgage broker with impeccable credentials:  Pre-Qualification Letter.

Last Updated on September 20, 2019 by Chuck Marunde