So you’ve finally found your dream home and decided to make an offer, congratulations! The last thing in the world you want to happen is to have your offer refused by the seller. This can happen and usually the reason is due to an offer that is too low or concerns about the buyer’s ability to finance the home. It’s easy to make a higher offer if the seller doesn’t like the price but what about the other problem?
When it comes to obtaining financing for a home purchase the old adage “an ounce of prevention is worth a pound of cure” is good advice. It’s always best to be prepared before making an offer on the home of your dreams. This not only shows the seller (and the bank) that you are serious but it proves to them that you are financially capable of buying the home.
Your first step is to obtain a pre-approval before making an offer. This tells the seller that you are indeed able to buy their home and the lender has already agreed to finance it for you after a review of your credit report and supporting financial documents. Without preapproval the seller has no way of knowing that you can actually afford the home, even though you are clearly interested. It also assures everyone involved that they are not wasting their time in accepting an offer from a buyer that will never come to fruition. Pre-approval is always the first step in buying a new home.
After you have been pre-approved it is OK to ask the loan officer to call the listing agent and inform him/her that you are well qualified and everything looks good. There’s nothing wrong with adding a bit of the “personal touch” in this type of situation and you will want to make sure that the listing agent is aware of your offer as soon as possible. Remember, you aren’t the only person that may be interested in the house. Sometimes it’s a matter of first come, first served!
In most states you have 30 days to secure financing after the seller has accepted your offer. You may want to check in your area to be sure this is the case for you but it is basically an industry norm. This means that after the 30 days has expired the seller has the right to refuse your offer. Don’t dally! Stay on top of things and be sure to provide any documents or necessary paperwork that the loan officer may request as quickly as possible. The sooner you actually obtain the loan, the better.
You should also be aware of the fact that sellers (and banks) like down payments and the larger the better! Does this mean that you won’t have your offer accepted if you can’t afford a big down payment? NO, it does not, but it does mean that if you can afford to do so it would be in your best interest. I have seen situations where the seller actually accepted a slightly lower offer because the buyer was able to make a significant down payment. Keep in mind, you may not be the only home buyer that is trying to buy the home and could possibly be competing with someone else. The better the offer, the more chances of it being accepted and be sure to include proof of your ability to make the down payment such as a bank statement or statement of other assets.
Finally, if you need to sell your home before you can buy another and have made a contingent offer, (that is stating that you must sell your home before you can actually purchase the other one), be sure to list your home before making an offer. Show the listing to the home sellers so that they will know that you are indeed serious about your offer. If you don’t do this there is a good chance that the seller will not take you seriously and your offer will be rejected