Now that you have taken the first step in selling your home, by listing it using the For Sale By Owner concept, the next most important thing you need to be thinking about is a mortgage pre-approval. Why should you get pre-approved? Well, too many homeowners think just because they’re selling a home, or already own a home that they are automatically pre-approved. This couldn’t be further from the truth. In fact, in most cases it just the opposite.

You need to start looking for a new home while your home is advertised. To do this properly you should get pre-approved with a letter of approval before starting the shopping process, this way any potential seller will take your offer serious and leave nothing to chance, something you as a seller will hope that accompanies your buyer also!

Lets look at this situation carefully. Mortgages are approved in most on what lenders call back and front ratios. This is what you are able to afford, matched against your income and factoring in your monthly obligations that you must pay to survive. If you have not yet sold your home, then guess what? Your current mortgage payment that you pay every month on the home that has not yet sold will be factored into that equation (YOUR RATIOS).

In too many instances, home Purchase and Sale agreements are based on what the industry knows as contingency deals, which in most cases means the buyers home must sell first, or the deal hinges on the fact the buyer’s home must be sold for any given reason.. Maybe it’s because the buyer needs to derive from his or her sale the down payment required by the lender, or maybe because the buyer is unable to qualify for a mortgage juggling both mortgage payments in the event his or her home does not sell.

These deals can be very frustrating for a seller, so keep this in mind. There are products in the mortgage world to solve these dilemmas. One product that can be of help if a buyers home does not sell right away is a bridge loan, or another is called a No Doc loan, which in some cases carries a slightly higher interest rate for the luxury of not having to produce documentation to qualify for the loan. These loans are a higher risk for the lender so in most cases the rate of interest that you will pay will be higher also!

Remember, its always in your best interest if you are already pre-approved with a lender to allow one of ZBF’s Mortgage Specialists to quote you a rate also, in most cases we are able to beat the rate and can provide the borrower with substantial savings. Keep in mind when you are calling the big companies that spend 20 million a year in advertising on TV and Radio, you pay for that in most cases because these companies have a minimum profit that must be achieved on each loan. They are not as flexible as a medium size or smaller company because their overhead is through the roof!

Sincerely,
Ed Williams
CEO/Founder
ZeroBrokerFees.com