pre-qualified to get on the list

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Topic Author
shell921
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pre-qualified to get on the list

Post by shell921 » Tue May 07, 2019 9:12 am

I went to look at a new housing development Sunday and there was one single story model I really liked.
They sold out of those but will build more in the next phase. They are putting names on a list of interested buyers and will
notify those on the list in about 8 weeks when they expect to start and finish the next phase of these single story homes.
The agent told me you must
"pre-qualify" to even get on the list.She gave me the name of the mortgage company they use and told me to fill out my info online
and get pre-qualified. The thing is I would not be needing a mortgage if I sell my house. I do have savings, no debt, excellent credit,
investments and pensions income. I would be a cash buyer once I sell my house. Not at all sure I am ready to move at this time, but
I guess I can not even get on the list unless I sell my house first and move out ? I don't want to even list my house for sale
unless I have a place to move to....so am I just out of luck on this????

"A pre-approval letter is the real deal, a statement from a lender that you qualify for a specific mortgage amount based on an underwriter's review of all of your financial information: credit report, pay stubs, bank statement, salary, assets, and obligations."
Last edited by shell921 on Tue May 07, 2019 4:09 pm, edited 1 time in total.

BusterMcTaco
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Re: pre-approval to get on the list

Post by BusterMcTaco » Tue May 07, 2019 9:15 am

Why not get a pre approval from a bank or CU of your choice? You shouldn't have any problem with your assets, and you aren't committing to actually opening a mortgage.

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cheese_breath
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Re: pre-approval to get on the list

Post by cheese_breath » Tue May 07, 2019 9:18 am

I guess if you want the house you'll need to follow their rules.
The surest way to know the future is when it becomes the past.

stan1
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Re: pre-approval to get on the list

Post by stan1 » Tue May 07, 2019 9:26 am

This is normal especially in a market where demand is strong for new homes. The builder teams with a preferred lender who does an initial evaluation of financial means to buy a home. If you look at it from the builder's perspective it is a way to separate serious buyers from the browsers. A lot of people dream about a new home but never follow up. The builder will only want to spend more time with people who have the verifiable means to purchase a home. They want more than "trust me, I have the cash". You do not need to use the builder's preferred lender or even get a mortgage.

In my area they do have a process for cash buyers, too. The builder still wants you to work with their preferred lender for validation. It means you would have to present a bank or brokerage statement with the cash needed to purchase the new home. They may still insist on a loan application and credit checks.

In my area there are few new construction homes. If you don't want to follow the builder's process they will just say "thank you for your interest". Maybe things are different where you are.

Topic Author
shell921
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Re: pre-approval to get on the list

Post by shell921 » Tue May 07, 2019 9:55 am

stan1 wrote:
Tue May 07, 2019 9:26 am
This is normal especially in a market where demand is strong for new homes. The builder teams with a preferred lender who does an initial evaluation of financial means to buy a home. If you look at it from the builder's perspective it is a way to separate serious buyers from the browsers. A lot of people dream about a new home but never follow up. The builder will only want to spend more time with people who have the verifiable means to purchase a home. They want more than "trust me, I have the cash". You do not need to use the builder's preferred lender or even get a mortgage.

In my area they do have a process for cash buyers, too. The builder still wants you to work with their preferred lender for validation. It means you would have to present a bank or brokerage statement with the cash needed to purchase the new home. They may still insist on a loan application and credit checks.

In my area there are few new construction homes. If you don't want to follow the builder's process they will just say "thank you for your interest". Maybe things are different where you are.
Thanks for this...yes I do understand the builder's position and know they don't need to have their time wasted dealing with unqualified people. I guess I should contact the preferred lender and ask about the process for cash buyers.

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cheese_breath
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Re: pre-approval to get on the list

Post by cheese_breath » Tue May 07, 2019 10:09 am

shell921 wrote:
Tue May 07, 2019 9:55 am
stan1 wrote:
Tue May 07, 2019 9:26 am
This is normal especially in a market where demand is strong for new homes. The builder teams with a preferred lender who does an initial evaluation of financial means to buy a home. If you look at it from the builder's perspective it is a way to separate serious buyers from the browsers. A lot of people dream about a new home but never follow up. The builder will only want to spend more time with people who have the verifiable means to purchase a home. They want more than "trust me, I have the cash". You do not need to use the builder's preferred lender or even get a mortgage.

In my area they do have a process for cash buyers, too. The builder still wants you to work with their preferred lender for validation. It means you would have to present a bank or brokerage statement with the cash needed to purchase the new home. They may still insist on a loan application and credit checks.

In my area there are few new construction homes. If you don't want to follow the builder's process they will just say "thank you for your interest". Maybe things are different where you are.
Thanks for this...yes I do understand the builder's position and know they don't need to have their time wasted dealing with unqualified people. I guess I should contact the preferred lender and ask about the process for cash buyers.
Why would the preferred lender be interested in cash buyers? I imagine the process probably goes something like this... You give the builder the cash or put it in escrow, and he builds you a house. You're asking the builder to go on faith that you'll be able to sell your house to get the necessary cash. Until you actually HAVE the cash why should he consider you a cash buyer?

Or, you could just go through the pre-approval process and get on the list.
The surest way to know the future is when it becomes the past.

Topic Author
shell921
Posts: 273
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Re: pre-approval to get on the list

Post by shell921 » Tue May 07, 2019 10:19 am

cheese_breath wrote:
Tue May 07, 2019 10:09 am
shell921 wrote:
Tue May 07, 2019 9:55 am
stan1 wrote:
Tue May 07, 2019 9:26 am
This is normal especially in a market where demand is strong for new homes. The builder teams with a preferred lender who does an initial evaluation of financial means to buy a home. If you look at it from the builder's perspective it is a way to separate serious buyers from the browsers. A lot of people dream about a new home but never follow up. The builder will only want to spend more time with people who have the verifiable means to purchase a home. They want more than "trust me, I have the cash". You do not need to use the builder's preferred lender or even get a mortgage.

In my area they do have a process for cash buyers, too. The builder still wants you to work with their preferred lender for validation. It means you would have to present a bank or brokerage statement with the cash needed to purchase the new home. They may still insist on a loan application and credit checks.

In my area there are few new construction homes. If you don't want to follow the builder's process they will just say "thank you for your interest". Maybe things are different where you are.
Thanks for this...yes I do understand the builder's position and know they don't need to have their time wasted dealing with unqualified people. I guess I should contact the preferred lender and ask about the process for cash buyers.
Why would the preferred lender be interested in cash buyers? I imagine the process probably goes something like this... You give the builder the cash or put it in escrow, and he builds you a house. You're asking the builder to go on faith that you'll be able to sell your house to get the necessary cash. Until you actually HAVE the cash why should he consider you a cash buyer?

Or, you could just go through the pre-approval process and get on the list.
Right--this is my dilemma ! If I am not seeking a mortgage why would the lender want to bother with me ? And until i have the cash, I am not really a "cash buyer". And so to be put on the list I must first sell me house !!! The sales agent told me I "don't have a chance" of getting to buy one of those soon to be build single story homes unless I first "get on the list".

bluebolt
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Re: pre-approval to get on the list

Post by bluebolt » Tue May 07, 2019 10:30 am

Why do you have to disclose how you plan to finance the house (or not) order to get a pre-approval?

Just provide the documentation, get the pre-approval, and when it comes to making an offer in the future, make a cash offer.

Topic Author
shell921
Posts: 273
Joined: Fri Jul 06, 2018 5:13 pm

Re: pre-approval to get on the list

Post by shell921 » Tue May 07, 2019 10:36 am

bluebolt wrote:
Tue May 07, 2019 10:30 am
Why do you have to disclose how you plan to finance the house (or not) order to get a pre-approval?

Just provide the documentation, get the pre-approval, and when it comes to making an offer in the future, make a cash offer.
Ok but would the mortgage company even want to bother with me if I am not going to need a mortgage? I guess I need to ask them.
I think to get the pre-approval you have to tell them where the $$ will come from to buy the new home if you are not seeking a mortgage.
Thanks for helping me fumble my way through this.
:confused

EddyB
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Re: pre-approval to get on the list

Post by EddyB » Tue May 07, 2019 10:38 am

shell921 wrote:
Tue May 07, 2019 10:36 am
bluebolt wrote:
Tue May 07, 2019 10:30 am
Why do you have to disclose how you plan to finance the house (or not) order to get a pre-approval?

Just provide the documentation, get the pre-approval, and when it comes to making an offer in the future, make a cash offer.
Ok but would the mortgage company even want to bother with me if I am not going to need a mortgage? I guess I need to ask them.
I think to get the pre-approval you have to tell them where the $$ will come from to buy the new home if you are not seeking a mortgage.
Thanks for helping me fumble my way through this.
:confused
The “preapproval” is preapproval by a lender for a loan. That is all it is. You do not need to tell the lender that you don’t intend to use the loan, and you don’t ultimately need to use the loan.

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cheese_breath
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Re: pre-approval to get on the list

Post by cheese_breath » Tue May 07, 2019 10:39 am

shell921 wrote:
Tue May 07, 2019 10:19 am
cheese_breath wrote:
Tue May 07, 2019 10:09 am
shell921 wrote:
Tue May 07, 2019 9:55 am
stan1 wrote:
Tue May 07, 2019 9:26 am
This is normal especially in a market where demand is strong for new homes. The builder teams with a preferred lender who does an initial evaluation of financial means to buy a home. If you look at it from the builder's perspective it is a way to separate serious buyers from the browsers. A lot of people dream about a new home but never follow up. The builder will only want to spend more time with people who have the verifiable means to purchase a home. They want more than "trust me, I have the cash". You do not need to use the builder's preferred lender or even get a mortgage.

In my area they do have a process for cash buyers, too. The builder still wants you to work with their preferred lender for validation. It means you would have to present a bank or brokerage statement with the cash needed to purchase the new home. They may still insist on a loan application and credit checks.

In my area there are few new construction homes. If you don't want to follow the builder's process they will just say "thank you for your interest". Maybe things are different where you are.
Thanks for this...yes I do understand the builder's position and know they don't need to have their time wasted dealing with unqualified people. I guess I should contact the preferred lender and ask about the process for cash buyers.
Why would the preferred lender be interested in cash buyers? I imagine the process probably goes something like this... You give the builder the cash or put it in escrow, and he builds you a house. You're asking the builder to go on faith that you'll be able to sell your house to get the necessary cash. Until you actually HAVE the cash why should he consider you a cash buyer?

Or, you could just go through the pre-approval process and get on the list.
Right--this is my dilemma ! If I am not seeking a mortgage why would the lender want to bother with me ? And until i have the cash, I am not really a "cash buyer". And so to be put on the list I must first sell me house !!! The sales agent told me I "don't have a chance" of getting to buy one of those soon to be build single story homes unless I first "get on the list".
Whether you get a mortgage or not there are fees associated with the pre-approval process you will pay to the lender. So rather than obsessing over something you can't change why not just go through the pre-approval process or forget about the house? It is what it is.
The surest way to know the future is when it becomes the past.

stan1
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Re: pre-approval to get on the list

Post by stan1 » Tue May 07, 2019 10:48 am

cheese_breath wrote:
Tue May 07, 2019 10:09 am
Why would the preferred lender be interested in cash buyers? I imagine the process probably goes something like this... You give the builder the cash or put it in escrow, and he builds you a house. You're asking the builder to go on faith that you'll be able to sell your house to get the necessary cash. Until you actually HAVE the cash why should he consider you a cash buyer?

Or, you could just go through the pre-approval process and get on the list.
Because the builder has essentially outsourced their financial vetting process to their preferred lender (including cash sales). It is what large mass market builders have done in my city for at least 20 years now. Maybe its not done this way everywhere.

In the situation you describe a builder would not go on faith that you'd get the cash when your existing house sells. In order to start the process to purchase a house under construction they would make you apply and qualify for a mortgage with all parties assuming the existing house would sell prior to closing escrow on the new house. In a strong market builder can make a lot of demands and get what they ask for. If you don't want to play their game you don't have to -- but you also won't have one of their houses. Someone else will play the game.

neous
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Re: pre-approval to get on the list

Post by neous » Tue May 07, 2019 10:49 am

your chances are not too great, because you'll be a cash buyer only upon selling your current house. but getting on the list is a commitment to have a new home built for you. Of course you can always just sign up and have it built and sell the old house when the new one is ready to be moved in or just sell and rent until your new house is built.

mak1277
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Re: pre-approval to get on the list

Post by mak1277 » Tue May 07, 2019 10:50 am

shell921 wrote:
Tue May 07, 2019 10:36 am
bluebolt wrote:
Tue May 07, 2019 10:30 am
Why do you have to disclose how you plan to finance the house (or not) order to get a pre-approval?

Just provide the documentation, get the pre-approval, and when it comes to making an offer in the future, make a cash offer.
Ok but would the mortgage company even want to bother with me if I am not going to need a mortgage? I guess I need to ask them.
I think to get the pre-approval you have to tell them where the $$ will come from to buy the new home if you are not seeking a mortgage.
Thanks for helping me fumble my way through this.
:confused
I wouldn't tell the mortgage company anything other than, "I would like to get pre-approved for a loan".

staythecourse
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Re: pre-approval to get on the list

Post by staythecourse » Tue May 07, 2019 10:54 am

What's the problem? Do you not have the assets or income or both WITHOUT selling the house? If you do just get the pre approval. It takes a whole 10 minutes. If you don't then your tough out of luck. I woudl NOT consider selling my house without having another house lined up. This house isn't even built yet. There are SO MANY issues that could come up from their or your side where it may never come to fruition.

As I tell everyone do NOT love any house or location until you actually move in. It blurs your thought process. A house is just four walls, ceiling, divided into multiple boxes. That's it.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

whomever
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Re: pre-approval to get on the list

Post by whomever » Tue May 07, 2019 11:02 am

FWIW, the last time we were house shopping our realtor suggested we get a pre-approval letter even though we were going to do a cash purchase. Her explanation was that some sellers might be concerned about a buyer's ability to pay, and if that situation arose she could show the letter (or just say she'd seen it??) to the buyer's realtor. Heck, maybe she just wanted to make sure we weren't wasting her time, I dunno. Our credit union was happy to provide the letter. It didn't cost anything and wasn't much of a hassle - maybe 20 min. at the credit union and a couple of pages of forms. We didn't hide what we were doing; the mortgage lady at the CU said that was fine, they were happy to set things up because sometimes people actually ended up getting a mortgage anyway. Or maybe her performance review was based on how many approvals she did, vs. how many actually got mortgages, who knows.

In any event, there wasn't much of a downside I could see.

ohai
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Re: pre-approval to get on the list

Post by ohai » Tue May 07, 2019 11:13 am

Just get a pre approval letter. If you use a bank where you already have accounts, they might already have your credit information and can issue the preapproval right away.

Topic Author
shell921
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Re: pre-approval to get on the list

Post by shell921 » Tue May 07, 2019 12:18 pm

staythecourse wrote:
Tue May 07, 2019 10:54 am
What's the problem? Do you not have the assets or income or both WITHOUT selling the house? If you do just get the pre approval. It takes a whole 10 minutes. If you don't then your tough out of luck. I woudl NOT consider selling my house without having another house lined up. This house isn't even built yet. There are SO MANY issues that could come up from their or your side where it may never come to fruition.

As I tell everyone do NOT love any house or location until you actually move in. It blurs your thought process. A house is just four walls, ceiling, divided into multiple boxes. That's it.

Good luck.
These homes I like will be in the $900,000 range. The agent told me you must
"pre-qualify" to even get on the list of potential buyers and I understand why- I am not questioning that.

The new home sales agent gave me a paper with the mortgage company's name that the builder uses.
I did not tell her I would be a cash buyer as
I was taken by surprise that there would be a list I need to pre qualify for to get on. I guess I thought
that if they verified I own my mortgage free home, have no debt and excellent credit and so forth I would not
need anything else. I have not looked at new housing developments in many years so I did
know about this pre qualifying stuff. The sales office was crowded with others wanting info so I did not
want to take up any more of agent's time. I guess i should have asked her what about cash buyers.

I would not be needing a mortgage if I sell my house. I own a 4,000 sq ft custom home- worth probably $1.6 million that is
mortgage free. I do have savings, no debt, excellent credit,
investments and pensions income. I do not want to use my savings and investment $$ which total about
$1 million. I want to use the $$$ from the sale of my home...should I decide I want to buy one of these new homes.
And right- I have no intention of even listing my home for sale unless I have got another place lined up.

jharkin
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Location: Boston suburbs

Re: pre-approval to get on the list

Post by jharkin » Tue May 07, 2019 1:12 pm

Just go ahead an get the pre-approval. Other than the fact they will do a hard credit pull there is no downside. Not sure about the poster above but I have never paid a dime for a pre-approval and its very common for people to preapprove with one bank, and then shop the offer to other banks after signing for a better rate.

As mentioned you are under no obligation to actually use the financing.

ohai
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Re: pre-approval to get on the list

Post by ohai » Tue May 07, 2019 1:24 pm

I don't see why you wouldn't get a 15/1 ARM or something, even if you have the cash on hand. 3.2% or whatever interest rates that you can deduct for taxes is the great giveaway of modern US.

neilpilot
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Re: pre-approval to get on the list

Post by neilpilot » Tue May 07, 2019 1:34 pm

ohai wrote:
Tue May 07, 2019 1:24 pm
I don't see why you wouldn't get a 15/1 ARM or something, even if you have the cash on hand. 3.2% or whatever interest rates that you can deduct for taxes is the great giveaway of modern US.
Of course, you only get the full advantage of that tax write-off if all of your other deductions meet or exceed the standard deduction. With the recent tax law change, many find that their deductions (excluding mortgage interest) do not rise to the new higher standard deduction.

ohai
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Re: pre-approval to get on the list

Post by ohai » Tue May 07, 2019 1:41 pm

That is true. However, even without tax deduction, I'd say most peoples' cost of funds is higher than those mortgage rates.

mmmodem
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Re: pre-approval to get on the list

Post by mmmodem » Tue May 07, 2019 1:46 pm

Speaking as someone who purchased a newly built home, the builder's don't really care how the home is paid for as long as it is paid for.

You already know why you need the pre-approval. The next step is they go down their list and choose you to purchase the next home. You choose the plot and put down a deposit. Now, you tell them how you're going to pay. And like I said, the builder's don't care. However, the sales agent may care as they may get a kickback from the loan agent. I don't have any proof of this but as soon as I said I would go with my own realtor, I suddenly got the cold shoulder from the sales agent. Therefore, I agree with you not letting them know you are a cash buyer until at least you're on contract.

Topic Author
shell921
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Re: pre-approval to get on the list

Post by shell921 » Tue May 07, 2019 2:02 pm

jharkin wrote:
Tue May 07, 2019 1:12 pm
Just go ahead an get the pre-approval. Other than the fact they will do a hard credit pull there is no downside. Not sure about the poster above but I have never paid a dime for a pre-approval and its very common for people to preapprove with one bank, and then shop the offer to other banks after signing for a better rate.

As mentioned you are under no obligation to actually use the financing.
Thank-you. Yes the sales agent told me there is no fee for the pre-approval. Another wrinkle is getting Experian to lift my credit freeze!
I had a terrible time trying to get a human to talk last time I called Experian and many on here have reported the same thing!

delamer
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Re: pre-approval to get on the list

Post by delamer » Tue May 07, 2019 2:11 pm

shell921 wrote:
Tue May 07, 2019 2:02 pm
jharkin wrote:
Tue May 07, 2019 1:12 pm
Just go ahead an get the pre-approval. Other than the fact they will do a hard credit pull there is no downside. Not sure about the poster above but I have never paid a dime for a pre-approval and its very common for people to preapprove with one bank, and then shop the offer to other banks after signing for a better rate.

As mentioned you are under no obligation to actually use the financing.
Thank-you. Yes the sales agent told me there is no fee for the pre-approval. Another wrinkle is getting Experian to lift my credit freeze!
I had a terrible time trying to get a human to talk last time I called Experian and many on here have reported the same thing!
I had my PIN and was able to do a temporary “unfreeze” online without any problem.

Do you have any idea whether you can qualify based on income/assets to purchase the new home without selling your current home?

In any case, your best bet is to contact the preferred lender and find out what options you have. Surely, you aren’t the first cash buyer they’ve encountered.

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8foot7
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Re: pre-approval to get on the list

Post by 8foot7 » Tue May 07, 2019 2:27 pm

shell921 wrote:
Tue May 07, 2019 12:18 pm

I would not be needing a mortgage if I sell my house. I own a 4,000 sq ft custom home- worth probably $1.6 million that is
mortgage free. I do have savings, no debt, excellent credit,
investments and pensions income. I do not want to use my savings and investment $$ which total about
$1 million. I want to use the $$$ from the sale of my home...should I decide I want to buy one of these new homes.
And right- I have no intention of even listing my home for sale unless I have got another place lined up.
Have your brokerage print you a letter that says

This is to confirm that as of today's date, shell921 has liquid assets in excess of $500,000 or whatever the max price of the homes you're looking at is.

Give that to the builder. If that's not good enough, find another builder.

If you can't show those assets, then you're not really a cash buyer at this point, are you? You may be when your house sells but that's a heck of a contingency for a spec builder.

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Phineas J. Whoopee
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Re: pre-approval to get on the list

Post by Phineas J. Whoopee » Tue May 07, 2019 2:41 pm

OP: the title of your thread says preapproval, but the body of your first post says prequalified. They are two different things. Can you please clarify which it is?
PJW

Topic Author
shell921
Posts: 273
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Re: pre-approval to get on the list

Post by shell921 » Tue May 07, 2019 4:08 pm

Phineas J. Whoopee wrote:
Tue May 07, 2019 2:41 pm
OP: the title of your thread says preapproval, but the body of your first post says prequalified. They are two different things. Can you please clarify which it is?
PJW
Sorry for the confusion...the paper the sales agent gave me that gives the number of Eagle Home Mortgage says:
" prequalified".

Guess I did not realize prequalified is different from "preapproved".

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alpenglow
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Re: pre-qualified to get on the list

Post by alpenglow » Tue May 07, 2019 4:42 pm

Just out of curiosity, where is this super hot new construction market that you are looking at? The market is nothing like this near me (NY).

staythecourse
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Re: pre-approval to get on the list

Post by staythecourse » Tue May 07, 2019 4:46 pm

shell921 wrote:
Tue May 07, 2019 12:18 pm
staythecourse wrote:
Tue May 07, 2019 10:54 am
What's the problem? Do you not have the assets or income or both WITHOUT selling the house? If you do just get the pre approval. It takes a whole 10 minutes. If you don't then your tough out of luck. I woudl NOT consider selling my house without having another house lined up. This house isn't even built yet. There are SO MANY issues that could come up from their or your side where it may never come to fruition.

As I tell everyone do NOT love any house or location until you actually move in. It blurs your thought process. A house is just four walls, ceiling, divided into multiple boxes. That's it.

Good luck.
These homes I like will be in the $900,000 range. The agent told me you must
"pre-qualify" to even get on the list of potential buyers and I understand why- I am not questioning that.

The new home sales agent gave me a paper with the mortgage company's name that the builder uses.
I did not tell her I would be a cash buyer as
I was taken by surprise that there would be a list I need to pre qualify for to get on. I guess I thought
that if they verified I own my mortgage free home, have no debt and excellent credit and so forth I would not
need anything else. I have not looked at new housing developments in many years so I did
know about this pre qualifying stuff. The sales office was crowded with others wanting info so I did not
want to take up any more of agent's time. I guess i should have asked her what about cash buyers.

I would not be needing a mortgage if I sell my house. I own a 4,000 sq ft custom home- worth probably $1.6 million that is
mortgage free. I do have savings, no debt, excellent credit,
investments and pensions income. I do not want to use my savings and investment $$ which total about
$1 million. I want to use the $$$ from the sale of my home...should I decide I want to buy one of these new homes.
And right- I have no intention of even listing my home for sale unless I have got another place lined up.
Still don't understand the problem. Just get the pre approval with whoever they ask. It is surely a kickback from the mortgage company to the agent/ builder as they know most folks don't have a "mortgage guy" and just go with whoever they rec.

It doesn't mean you HAVE to get a mortgage in the end. Just have to be able to get a mortgage. If I was the builder I wouldn't be thrilled either for a almost cash buyer who MAY have the money when it is time to close. Builders are risk averse.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

Topic Author
shell921
Posts: 273
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Re: pre-qualified to get on the list

Post by shell921 » Tue May 07, 2019 5:38 pm

alpenglow wrote:
Tue May 07, 2019 4:42 pm
Just out of curiosity, where is this super hot new construction market that you are looking at? The market is nothing like this near me (NY).
North of San Diego - inland - is a new development called "Harmony Grove Village".

https://www.lennar.com/new-homes/califo ... hittingham

The one story is "residence 1"

And I was mistaken the prices start at $1,035,900 for the single story 3183 sq ft home.

https://www.lennar.com/new-homes/califo ... esidence-1

Topic Author
shell921
Posts: 273
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Re: pre-approval to get on the list

Post by shell921 » Tue May 07, 2019 5:42 pm

staythecourse wrote:
Tue May 07, 2019 4:46 pm
shell921 wrote:
Tue May 07, 2019 12:18 pm
staythecourse wrote:
Tue May 07, 2019 10:54 am
What's the problem? Do you not have the assets or income or both WITHOUT selling the house? If you do just get the pre approval. It takes a whole 10 minutes. If you don't then your tough out of luck. I woudl NOT consider selling my house without having another house lined up. This house isn't even built yet. There are SO MANY issues that could come up from their or your side where it may never come to fruition.

As I tell everyone do NOT love any house or location until you actually move in. It blurs your thought process. A house is just four walls, ceiling, divided into multiple boxes. That's it.

Good luck.
These homes I like will be in the $900,000 range. The agent told me you must
"pre-qualify" to even get on the list of potential buyers and I understand why- I am not questioning that.

The new home sales agent gave me a paper with the mortgage company's name that the builder uses.
I did not tell her I would be a cash buyer as
I was taken by surprise that there would be a list I need to pre qualify for to get on. I guess I thought
that if they verified I own my mortgage free home, have no debt and excellent credit and so forth I would not
need anything else. I have not looked at new housing developments in many years so I did
know about this pre qualifying stuff. The sales office was crowded with others wanting info so I did not
want to take up any more of agent's time. I guess i should have asked her what about cash buyers.

I would not be needing a mortgage if I sell my house. I own a 4,000 sq ft custom home- worth probably $1.6 million that is
mortgage free. I do have savings, no debt, excellent credit,
investments and pensions income. I do not want to use my savings and investment $$ which total about
$1 million. I want to use the $$$ from the sale of my home...should I decide I want to buy one of these new homes.
And right- I have no intention of even listing my home for sale unless I have got another place lined up.
Still don't understand the problem. Just get the pre approval with whoever they ask. It is surely a kickback from the mortgage company to the agent/ builder as they know most folks don't have a "mortgage guy" and just go with whoever they rec.

It doesn't mean you HAVE to get a mortgage in the end. Just have to be able to get a mortgage. If I was the builder I wouldn't be thrilled either for a almost cash buyer who MAY have the money when it is time to close. Builders are risk averse.

Good luck.
Ok so I should just ask the mortgage company if I put $xxx amount down can I get a mortgage for the rest?

playtothebeat
Posts: 321
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Location: southern california

Re: pre-qualified to get on the list

Post by playtothebeat » Tue May 07, 2019 6:01 pm

I didn’t read the entire post, but if I understand correctly you’re a cash buyer only after you sell your house? I.e. you’d have a “sale contingency” in the purchase contract tied to selling your current house? In today’s market I’m guessing that’s a nonstarter for many builders/sellers.
Why not just get prequalified for a mortgage, hell maybe even take it out (I understand there is a cost involved to this; maybe do a HELOC which are usually cheaper to close) then pay off as soon as you sell your house? That way you can close new house before selling the current one and avoid contingencies in the contract.

staythecourse
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Re: pre-approval to get on the list

Post by staythecourse » Wed May 08, 2019 10:08 am

shell921 wrote:
Tue May 07, 2019 5:42 pm
staythecourse wrote:
Tue May 07, 2019 4:46 pm
shell921 wrote:
Tue May 07, 2019 12:18 pm
staythecourse wrote:
Tue May 07, 2019 10:54 am
What's the problem? Do you not have the assets or income or both WITHOUT selling the house? If you do just get the pre approval. It takes a whole 10 minutes. If you don't then your tough out of luck. I woudl NOT consider selling my house without having another house lined up. This house isn't even built yet. There are SO MANY issues that could come up from their or your side where it may never come to fruition.

As I tell everyone do NOT love any house or location until you actually move in. It blurs your thought process. A house is just four walls, ceiling, divided into multiple boxes. That's it.

Good luck.
These homes I like will be in the $900,000 range. The agent told me you must
"pre-qualify" to even get on the list of potential buyers and I understand why- I am not questioning that.

The new home sales agent gave me a paper with the mortgage company's name that the builder uses.
I did not tell her I would be a cash buyer as
I was taken by surprise that there would be a list I need to pre qualify for to get on. I guess I thought
that if they verified I own my mortgage free home, have no debt and excellent credit and so forth I would not
need anything else. I have not looked at new housing developments in many years so I did
know about this pre qualifying stuff. The sales office was crowded with others wanting info so I did not
want to take up any more of agent's time. I guess i should have asked her what about cash buyers.

I would not be needing a mortgage if I sell my house. I own a 4,000 sq ft custom home- worth probably $1.6 million that is
mortgage free. I do have savings, no debt, excellent credit,
investments and pensions income. I do not want to use my savings and investment $$ which total about
$1 million. I want to use the $$$ from the sale of my home...should I decide I want to buy one of these new homes.
And right- I have no intention of even listing my home for sale unless I have got another place lined up.
Still don't understand the problem. Just get the pre approval with whoever they ask. It is surely a kickback from the mortgage company to the agent/ builder as they know most folks don't have a "mortgage guy" and just go with whoever they rec.

It doesn't mean you HAVE to get a mortgage in the end. Just have to be able to get a mortgage. If I was the builder I wouldn't be thrilled either for a almost cash buyer who MAY have the money when it is time to close. Builders are risk averse.

Good luck.
Ok so I should just ask the mortgage company if I put $xxx amount down can I get a mortgage for the rest?
Correct.

In the end, it gives you the most options. We built our home and can say NOTHING goes as smooth as they promise. Not always their fault either. You can take the mortgage, move in, sell house, and pay the mortgage down with the sale proceeds. I think flexibility in moving (especially with kids if that is the case) is VERY important.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

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FlyAF
Posts: 388
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Re: pre-qualified to get on the list

Post by FlyAF » Wed May 08, 2019 11:02 am

Why not just ask the builder what to do being a cash buyer? Guaranteed they can answer you question a lot better than the internet can. We're literally talking about a 5 minute phone call.

I went through this a couple of years ago. The sales rep started talking to me about all this kind of stuff. I simply said that I'd be paying cash (I didn't need to sell my place to raise it though, that might present a wrinkle) and they told me to disregard everything they just said and to have a bank send a letter saying that I had the funds. They go through their default routine because most people that walk through their doors don't have a million dollars sitting in the bank. You/I are an anomaly in the real world.

neilpilot
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Location: Memphis area

Re: pre-qualified to get on the list

Post by neilpilot » Wed May 08, 2019 11:06 am

FlyAF wrote:
Wed May 08, 2019 11:02 am
Why not just ask the builder what to do being a cash buyer? Guaranteed they can answer you question a lot better than the internet can. We're literally talking about a 5 minute phone call.

I went through this a couple of years ago. The sales rep started talking to me about all this kind of stuff. I simply said that I'd be paying cash (I didn't need to sell my place to raise it though, that might present a wrinkle) and they told me to disregard everything they just said and to have a bank send a letter saying that I had the funds. They go through their default routine because most people that walk through their doors don't have a million dollars sitting in the bank. You/I are an anomaly in the real world.
As previously discussed, the OP is not a cash buyer. They are a "contingent on selling my current home" buyer. Very different.

User avatar
FlyAF
Posts: 388
Joined: Tue Jan 23, 2018 11:14 am

Re: pre-qualified to get on the list

Post by FlyAF » Wed May 08, 2019 11:14 am

neilpilot wrote:
Wed May 08, 2019 11:06 am
FlyAF wrote:
Wed May 08, 2019 11:02 am
Why not just ask the builder what to do being a cash buyer? Guaranteed they can answer you question a lot better than the internet can. We're literally talking about a 5 minute phone call.

I went through this a couple of years ago. The sales rep started talking to me about all this kind of stuff. I simply said that I'd be paying cash (I didn't need to sell my place to raise it though, that might present a wrinkle) and they told me to disregard everything they just said and to have a bank send a letter saying that I had the funds. They go through their default routine because most people that walk through their doors don't have a million dollars sitting in the bank. You/I are an anomaly in the real world.
As previously discussed, the OP is not a cash buyer. They are a "contingent on selling my current home" buyer. Very different.
Exactly why I said: "(I didn't need to sell my place to raise it though, that might present a wrinkle)"

DrGoogle2017
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Re: pre-qualified to get on the list

Post by DrGoogle2017 » Wed May 08, 2019 11:36 am

Last time they did this in my area, it was a precursor to the housing bubble, I refused to list my assets. It’s like telling them, they can raise price on me because they know how much you have. Oh no, I’m not that stupid.

Topic Author
shell921
Posts: 273
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Re: pre-qualified to get on the list

Post by shell921 » Wed May 08, 2019 1:54 pm

I do understand that because the demand for these homes is great, the builder is not going
to accept a "contingency" of me selling my house. I am not even 100% sure I want to move. I only wanted to get on
the list-because the sales agent told me I "didn't stand a chance" of being able to buy one of the single story homes in the next
phase unless I was on the list.

And so my fear was that unless I sold my house first, I would not be able get on the list and I
now see that YES that is true! My pension income is not enough to qualify me for a $500,000 mortgage.
I just checked an on-line mortgage calculator. I qualify for a $360,000 mortgage. :shock:

I am not going to sell my house to get on that list. I can't deal with that kind of uncertainty- leaving
my home not knowing where I will be able to live. :confused .So I guess I am just out of luck. :(

Oh well...at least now I know more about the process and how things work in home sales nowadays.
There are always re-sales and maybe in 9 months or a year when the
next phase is all built, the demand will be less.

Thanks for all who replied.

researcher
Posts: 979
Joined: Thu Mar 12, 2015 7:05 pm

Re: pre-qualified to get on the list

Post by researcher » Wed May 08, 2019 2:42 pm

shell921 wrote:
Wed May 08, 2019 1:54 pm
I only wanted to get on the list-because the sales agent told me I "didn't stand a chance" of being able to buy one of the single story homes in the next
phase unless I was on the list.

And so my fear was that unless I sold my house first, I would not be able get on the list and I
now see that YES that is true! My pension income is not enough to qualify me for a $500,000 mortgage.
I just checked an on-line mortgage calculator. I qualify for a $360,000 mortgage. :shock:

I am not going to sell my house to get on that list. I can't deal with that kind of uncertainty- leaving
my home not knowing where I will be able to live. :confused .So I guess I am just out of luck. :(
You are making this WAY more complicated than it needs to be.

Just contact the mortgage company and get pre-qualified so you can get on the list!

Who cares if the online mortgage calculator says you only qualify for a $360K mortgage.
Tell them you plan to finance whatever you qualify for, and the rest will be put down as a down payment.

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Meg77
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Re: pre-qualified to get on the list

Post by Meg77 » Wed May 08, 2019 4:36 pm

I'm a private banker, and for our wealthy clients we do a preapproval letter that varies from the norm. We assert that the client has sufficient assets to purchase a particular home in cash. Realtors will usually accept a Vanguard statement or liquidity verification letter from a bank or investment advisor as an alternative to a mortgage preapproval letter. If you don't have the assets but instead need your home equity, it might be harder, but you could submit proof of that I suppose and state your case. Lots of people buy homes in cash; I've never heard of needing a mortgage letter just to get on the list for a home that's not even sure to be built any time soon.
"An investment in knowledge pays the best interest." - Benjamin Franklin

Topic Author
shell921
Posts: 273
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Re: pre-qualified to get on the list

Post by shell921 » Thu May 09, 2019 9:22 am

Meg77 wrote:
Wed May 08, 2019 4:36 pm
I'm a private banker, and for our wealthy clients we do a preapproval letter that varies from the norm. We assert that the client has sufficient assets to purchase a particular home in cash. Realtors will usually accept a Vanguard statement or liquidity verification letter from a bank or investment advisor as an alternative to a mortgage preapproval letter. If you don't have the assets but instead need your home equity, it might be harder, but you could submit proof of that I suppose and state your case. Lots of people buy homes in cash; I've never heard of needing a mortgage letter just to get on the list for a home that's not even sure to be built any time soon.
Thanks for this Meg. I too had NEVER heard of needing a mortgage letter just to get on the list. I was so taken aback I couldn't think of what to ask next. They have two story homes for sale - several models - but these one story plans sold out and I guess because there is a lot of interest, they will build more and have created a list !

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8foot7
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Re: pre-qualified to get on the list

Post by 8foot7 » Thu May 09, 2019 9:37 am

These national tract builders get way ahead of themselves sometimes.

Lennar builds around here too. Back in 2011-2012 they were starting a new neighborhood in town, on about 30 acres or so of uncleared land off a busy road. We're talking trees, decades of pine needles, no trails, nothing, just unimproved uncleared land. We were kind of in the market so inquired about the site plan and home styles available. The agents wrote us back and said that all of that information would be released at this Saturday party and we should bring our checkbooks to pay the $1,000 reservation fee to be able to select a homesite. I said, what are you talking about? I want to see the plan and understand what lots are best and how the land looks. They said, yes, we'll show you the plan after we receive your $1,000 reservation and we can walk around the uncleared land and show you stakes where the lots will be. I said, so you're telling me I have to pay you a grand to walk around the woods where maybe I could visualize how a particular lot would look amidst 40 other homes? Yes was the answer, we have to manage the demand as we have an overflowing interest list.

Those are all huge red flag warning signs to me so we bowed out and told them we weren't interested. I'm not bringing my checkbook into a forest.

It was funny to see that neighborhood now 7-8 years later still with unsold homes even in a relatively hot market at that price point in a decent location. Other neighborhoods have begun, been constructed, and finished in that same timeframe so it was all BS anyway, as I figured.

I don't doubt in hot markets there's more demand than supply so it does make sense to me that they'd need to have some way to sort the lookers from the buyers, but I'm far from convinced that level of demand is always there.

ubermax
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Re: pre-qualified to get on the list

Post by ubermax » Mon May 13, 2019 2:36 pm

OP , we recently talked to a couple of local bankers ,and two builders, about financing for a home purchase - we're looking at existing homes as well as others that will be built in a couple of newly developing areas nearby ; I thought I would share some take aways - at one bank we asked for and got a pre-qualification letter after supplying debt and income data as well as a recent quarterly investment summary .

The letter explicitly pre-qualifies us for a purchase amount and implicitly for a loan amount , e.g. for a 400 grand purchase price and 20% down we would be implicitly qualified for a 320 grand loan - the bank looks at two debt/income ratios , one is based on current debt and is around 31-32% and the other is based on total debt and is roughly 41% ; if you plan on buying before selling they key on total debt and , if you've already sold the current home, it's current prospective debt - we decided to carry two mortgages since we feel our current condo will sell fairly quickly - also both banks that we talked to were vague when asked how they factor a client's assets into the qualification decision but one bank shared that they look for any financial trends that would be a red flag ; for example , large withdrawals over a period of time for someone who hasn't started RMD's .

We are considering a HELOC to free up equity in our current home up front to cover the 20% down payment requirement - the repayment interest rate is tied to prime and typically interest only for a certain period and then P&I - the builders that we talked to in our area here in CT both required a deposit and then within roughly a month 10% of purchase price minus the deposit to start building the house .

As a final thought , the banks appear to just look at your current status when you walk in the door , your status after you sell your current house is a future status today if you still own your home .

Sounds like you have some decisions to make !! Good Luck !!
Last edited by ubermax on Tue May 14, 2019 10:16 am, edited 1 time in total.

bsteiner
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Re: pre-qualified to get on the list

Post by bsteiner » Mon May 13, 2019 2:51 pm

I would find this annoying.

A couple of years ago a client was buying a condo. The broker wanted a letter from us saying that the trustee of one of his trusts that had liquid assets advised that more than $x (the purchase price) would be available for the purchase.

My telephone call with the broker went something like this:

broker: we need a letter ....

me: have you ever been to Manhattan?

broker: yes.

me: do you know that there are some tall buildings here?

broker: yes.

me: our client's family built and owns some of them.

DrGoogle2017
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Re: pre-qualified to get on the list

Post by DrGoogle2017 » Tue May 14, 2019 12:16 am

I’m surprised that Escondido is that expensive, I looked at Redfin and the prices are way below the listed price above. Granted this is a brand new home but still. It’s priced way above the local market.

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