People who are interested in buying a house generally seek mortgage preapproval before they begin looking at specific properties. That can eliminate a lot of uncertainty for both buyers and sellers.
What Does It Mean If a Buyer Has Been Preapproved for a Home Loan?
A person who has been preapproved for a mortgage has submitted a series of financial documents to a lender, and the company has reviewed the information, determined that the applicant meets its requirements, and offered to issue a loan for a specific amount of money. The buyer will have to get final approval, either from the same lender or from a different one, before a purchase can be finalized.
Why Might a Buyer Not Get Preapproved?
It’s possible that the buyer tried to get preapproved for a mortgage but couldn’t meet a lender’s guidelines. It’s also possible that the buyer didn’t want to take the time to seek preapproval or has never bought a house before and didn’t know that getting preapproved is recommended.
Another possibility is that the buyer doesn’t need to take out a mortgage to buy your house. The buyer might have saved up enough money to pay in cash or might intend to use the proceeds from the sale of another property to purchase your home.
Can a Buyer Who Hasn’t Been Preapproved Afford to Buy Your House?
Maybe, and maybe not. The buyer might not need to take out a mortgage, might be able to get approved without a problem, or might be planning to borrow an unrealistic amount.
One of the advantages of getting preapproved for a mortgage is that buyers know how much money a lender is willing to give them and can focus on properties in an appropriate price range. A buyer who hasn’t been preapproved might be looking at houses that are too expensive. Someone who offers to pay your full asking price might not be able to get a loan for that amount.
Should You Accept an Offer From a Buyer Who Hasn’t Been Preapproved?
It depends on the specific circumstances. You’ll have to get as much information as possible and look at the big picture. If the buyer can pay in cash, it’s likely that the deal will move forward smoothly. If the buyer didn’t seek mortgage preapproval or got turned down, accepting the offer can be risky for you. If the deal falls through and you have to relist your house, you’ll lose valuable time. Talk to your real estate agent about how long your home has been on the market and any other offers you have received and ask for advice on how to proceed.
