Purchasing a home isn‚Äôt without its challenges. Sometimes a seller will line up a potential mortgage lender in an effort to ensure all will run smoothly. The buyer then discovers this upon making an offer. The objective here is to make the closing process as easy as possible while hopefully avoiding delay.
Some sellers are able to find lenders who are willing to provide the financing for an eventual sale even before the properties are on the market. Language is then added to the sales contract that will require the buyer to, at the very least, be pre-approved by the chosen or preferred lender before a sale can be made.
So why would a seller want to use a preferred lender? Securing a preferred lender before you even have a buyer will enable you to weed out those who would be unable to secure financing themselves. This gives the seller more options where the contract is concerned and allows the seller to be very specific.
Since the seller requires the buyer to be pre-approved through the preferred lender, the buyer might just decide to go ahead and use that company. This will save the seller a lot of time and frustration throughout the entire selling process. Even if the buyer decides to go with another lender, the seller can rest easier knowing he or she will be approved and the sale will go through.
So why would the buyer choose to use the preferred lender? Sometimes this is just easier. If a lender has already been chosen, the process may be expedited more quickly. A buyer who is ready to get into the new home may relish an option that means less time. Also, if the buyer applies for a mortgage with a lender of his or her choosing and is turned down, the buyer can then go with the preferred lender. Since the buyer has already been pre-approved, due to the previous contract stipulation, the loan will go through.
As a seller, you might want to consider using a preferred lender, especially if you have already encountered prospective buyers who have been turned down for loans. Even if you are not in a hurry to sell your home, the idea of getting your hopes up only to have them dashed probably isn‚Äôt too appealing.
Likewise, if you are in the market for a new home, but feel you may be turned down, choosing the preferred loan option if offered by your seller may be a great choice. That way, even if you are turned down you will still be able to buy. This makes using a preferred lender a win-win situation for both the seller and buyer and may even help the overall process of selling or buying a home that much easier in the end.