NYTimes: The Advantages of Preapproval

http://www.nytimes.com/2012/06/10/realestate/mortgages-the-advantages-of-preapproval.html
Buyers who want a competitive edge will need more than a mortgage prequalification.

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3 thoughts on “NYTimes: The Advantages of Preapproval

  1. I am currently in the middle of trying to fix a mess caused by my lender not honoring a pre-approval based on facts they were well aware of. 😦 In particular this is a relocation to just outside commuting distance (150 miles). In my line of work (software, often contracting) and age they’re not going to hold a job for 2 or 3 months, so my choices were job, temporary apartment, then move, or move then find work (and live in the old house,which goes on the market after we buy, until I find work or if it sells, temporary living in the old city.)
    We qualify on income, debt ratio, appraisal of the new house. Some other lenders said they couldn’t consider it a primary residence that far away without a job, but this lender said as long as one of me and my wife committed to being in residence within 30 days of closing it was OK.
    Now less than 2 weeks before scheduled closing (had to get seller to extend the mortgage contingency) the loan officer says the underwriter says they can’t get PMI if I don’t have a job lined up there because I intend to quit my job here. I said I’d quit my job here after I find a job there (and we have cash on hand plus more expensive money [retirement] to carry both houses for a year on just unemployment.)
    I’m reminded of Seinfeld explaining anybody can TAKE a reservation, the hard part is honoring it.
    So we’re trying to borrow against our home equity (for personal reasons wasn’t able to do it in the first place.) If we are approved for that soon enough we can still buy the house we wanted (either with extension of the P&S or a cash offer if it’s back on the market) with the only harm being we’ll have to pay a second set of origination fees when we pay back the HE loan. (I wonder if the lender will refund the origination fees on the dishonored pre-approval.) Maybe we’ll get lucky and use the HE money to buy something that works better for us but that couldn’t have gotten approved for a mortgage (we had an offer on a cheaper house that needed work, which appraised as it was for more than the agreed price, but the lender said too many problems.) If we’re unlucky we lose this house and we can’t find something comparable at a comparable price.

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