The California Residential Purchase Agreement has gone through a tremendous overhaul. The new contract has gone from 10 to 16 pages! One of the most significant differences is how you share a Buyer’s financial qualifications and where they are in the lending process. A Buyer now needs to check one of three boxes stating if they are pre-qualified for a mortgage, pre-approved for a mortgage or completely underwritten for a mortgage. Here are what the three lending terms mean: 

Pre-qualified (You have completed a loan application and the lender has pulled credit. Based on all the numbers you input online or gave verbally; everything looks ok to purchase).

Pre-approved (A loan team has run your credit, verified your income, employment, and assets. Although, the actual bank lending the money has not approved anything. Based on the documents provided, everything looks ok to purchase).

Underwritten (The underwriter has verified your income, assets, and credit. You officially meet all their guidelines, pending the approval of the property, which won’t happen until you are in contract). 

If you are a Buyer, you need to go through the Underwriting process now or your offer will not be received as well as another party who has done this. In this competitive market, this is imperative to your success!  

If you are a Seller, this contract change will provide a better glimpse and confidence level into a potential Buyer’s ability to financially perform. 

To discuss this further, please reach out to your team Realtor. And, most importantly, all Buyers need to pick up the phone today and call their lender to ensure you have completed the Underwriting process.

Dana Green