Are agents just being nosey? Why do they need to know if you are pre-approved for a loan or can show proof of funds for a deal? Money matters are personal! If you’re a first time buyer it’s understandable to feel a little suspicious and put off by these types of questions but there is a valid reason this information is required from the start.
It’s also important to know that being pre-qualified for a loan is not the same thing as being pre-approved. When you call a lender a pre-qualification is generally just a quick estimate of how much you MAY be eligible to borrow based on the information given. A pre-approval however generally means a lender is ready to give you a loan based on your documentation and credit check. Pre-approvals usually have an “expiration date” and may have conditions attached.
You also may have to provide proof of funds especially if you are planning on purchasing a home with cash or if the terms for buying a home are cash only. Examples of proof include, an original or online bank statement, an open equity line of credit, or a money market account balance. The money has to be liquid and readily available in order to be considered a cash buyer.
Why do agents need to have this information? It gives them a general idea of a price range to look in when searching for available homes in which you would be qualified to make an offer. It also shows the agent and seller that you are a serious buyer. Sellers do not want just anybody walking through their home, only people who are qualified to actually make an offer and are serious about buying. Probably most importantly, no offer will be taken seriously without a pre-approval and/or proof of funds. It’s required.
So, that’s the long and short of it. Don’t be offended or concerned if an agent asks you to show them the money. They are just doing their job. J