Dated: 08/09/2016

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If you are in the process or looking to buy a home this is a must read. It is for agents but is good information for buyers.

Most agents these days have heard a horror story or two about the mortgage approval process...or lack thereof.

It's not uncommon for homebuyers to spend months searching for their dream home, and then months going through the mortgage process, only to be told the "D" word. For better or worse, the hand that denies loans is the hand that rules the buying process.

In addition to disappointed buyers, there's often collateral damage, in the form of agents and brokers, who after months helping people find the home of their dreams, discover that their time and hard work amounted to nothing.

How Smart Agents Avoid "Mortgage Purgatory"

To avoid the risk of investing time on dead-end leads, savvy agents have come up with strategies to focus on qualified leads, most likely to be approved. This benefits sellers and agents, and even buyers, who prefer to know early if they're unlikely to qualify, so they can get a head start improving their credit and positioning themselves to qualify.

One common policy is for prospective buyers to be pre-qualified for a mortgage before agents get too deep into the buying process. That enables agents to avoid wasting time, because not only do they have an assurance buyers will qualify for a loan, they also know which price range to target, based on the amount buyers pre-qualified to borrow. In a perfect world, all buyers would get their preapprovals the moment they decide to start shopping but, unfortunately, as we all know, this is often not the case.

Another option many agents are starting to take advantage of are some of the newer tools available like ScoreApprove, a web-based tool that gives agents and buyers detailed credit information (including a live credit score) and assesses their ability to qualify for a mortgage based on their current credit and financial situation. This information helps agents to distinguish between qualified leads and those buyers who are unlikely to obtain a loan.

While these have proven to be helpful techniques, the mortgage pre-approval process can still be tricky to navigate, especially for first-timers. It's important for agents to walk buyers through the process and tell them what to expect to help make it as smooth as possible.

Agents are busy and often overlook or forget to convey basic facts about pre-approvals. This can have serious consequences because buyers who don't know what to expect can get frustrated and overwhelmed, and sometimes may be driven to try other agents.

To avoid this fate, and keep buyers happy, here are 7 things many agents forget to tell homebuyers about the pre-approval process that you may find helpful:

1. Benefits of pre-approvals. Buyers often assume that pre-approval only benefits sellers and agents looking for a quick and easy sale. Agents should point out it helps buyers too, making their offer a more complete package, giving them more negotiating leverage, and showing them how much they can borrow so they can avoid wasting time on a "wild goose chase" in search of a home they cannot afford. The biggest benefit for buyers though is peace-of-mind, knowing they won't have to scramble at the last minute to find a loan once they have an accepted offer.

2. Provide a checklist. The hardest part about the mortgage process is keeping track of which documents are needed. The list can include W2's, income tax returns, bank statements, titles and deeds, past rental information, and more. A simple checklist can be extremely helpful, and buyers will be grateful to agents who provide it.

3. Save all documents. Applicants are sometimes asked to provide documents (such as proof of income) that date back 12 months or longer. Remind buyers to hang on to everything they can, and even dig up old paperwork, to ensure the process doesn't stall because of missing documents.

4. Look for houses in their price range. Pre-approval helps narrow the search for a home, by showing buyers how much they qualify to borrow. However, some buyers still look at homes above their price range, hoping they'll figure out a way. Try to remind them to focus on homes within their borrowing range, to save time, hassle, and disappointment.

5. Shop around for different lenders. Mortgages can be tricky, and not all lenders have the same criteria, rates, or loan options. It's important to speak with several lenders, to secure the best possible loan with the lowest rates and greatest flexibility.

6. Think long term. People who are denied a loan can often repair their credit and get approved a few months later. The problem is that most buyers are looking for a quick fix, and don't bother to take the steps necessary for long-term gains. It's beneficial to remind buyers that buying a home can be a long process, and the baby steps they take now to repair their credit can have big results in the next 6 to 12 months.

7. Check the expiration date. Pre-approvals generally only last a few months and then have to be renewed. The clock is ticking and buyers sometimes forget how quickly time passes. They should be reminded that once they're approved, they need to work extra hard to find the right home as quickly as possible, to take advantage of their pre-approval, and not need to start from scratch.

Want a simple way to know which leads are most likely to qualify for a mortgage? ScoreApprove is a cutting-edge toolthat automatically sends you homebuyers' credit information, along with their personal homebuying assessment, so you can determine how much time you should be spending with each buyer.


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Carolann Newton

I was a domestic paralegal for 8 years prior to Real Estate. Since I have been in Real Estate I have grown to love this business, even though it does have it's challenges; it is very exciting. There i....

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