Top 5 Reasons Why Pre-Approval Letters are no good

So here's the scenario:  You have a house for sale, you have an interested buyer who has written a contract and is preapproved.  At the 11th hour the financing falls through because . . . .

1) You are selling a fixer upper home and while the lender is willing to lend money on a fixer upper home, they will not lend if the house is missing any one or more of the following vital components:  heat, air, kitchen, bath, plumbing, carpeting . . .

2) You are an investor who just acquired the home as an investement and have owned it for less than a month, the lender requires the seller to have owned for 6 months or more . . .

3) You are working with a home buyer assistance program, buyer is pre-approved for the loan and the program, but the house has to pass inspection.  You find a few faucets need to be replaced and a GFCI outlet needs to be installed in a bathroom.  Your handy man does the repairs, the assitance program wants to see proof the faucet was installed by a licensed plumber and the outlet by a licensed electrician.

4) You bought the home, rehabbed the home, priced it comparable to other renovated homes in the surrounding areas based on the repairs you made.  Appraisal came in too low because the lender selected an appraiser from out of the area and that appraiser only used foreclosed homes as comparables.

5) You sold a home lease to own, and lender last year said if lease to own tenant made lease payments on time for a year and it could be proven, they could get them financed.  Tenant made payments on time, but used money orders, still has no credit, and the lender & the loan program is no longer around.

As home sellers there are many scenarios we are faced with every day.  And right now we are faced with 100's of good deals we can acquire and sell on to owner occupant buyers, but we need to be smart about the financing.  All real estate deals eventually hinge on the financing and if we can understand how the financing works, both for ourselves and our buyers, we will be able to sell a lot more houses and make a lot more money.

Join us in January 2010 at our General Meeting to discuss financing our owner occupant buyers.

Click here for meeting details and to register.

Have a story to share?  Comment here.

Would you like to be one of our panelists, email info at MAREInet.com.