Approval or Pre-Qualified Does It Really Matter?

Several weeks ago, I was discussing DIYs Flat Fee Real Estate business model with a prospect when he stopped me mid-sentence and said he wants to introduce me to business owner who has a similar innovative business model. The introduction to Nick Flanagan, CEO at Infinity Mortgage Holdings, reinforced the evolution of the MLS Real Estate industry.

Nick and his team at Infinity Mortgage Holdings, use a non conventional model to provide tremendous value to their clients in the banking and lending community. I had an opportunity to ask Nick a few questions that provided an interesting perspective on how mortgages can be done differently just like Flat Fee Real Estate.

Question: “Nick, how can the labor intensive mortgage process be changed much like what DIY has done with selling a home in Austin?”

Answer: “The process does not have to labor intensive! First, procuring a mortgage is very expensive for a lending company. The paperwork submitted by the home buyer must be validated on an individual basis. You can imagine how laborious reviewing and validating someone’s entire financial life over the last 2 years can be. Usually, the mortgage company views your credit report and you are “pre-qualified”. The mortgage company doesn’t initiate the paperwork process until after the buyer has selected a home. At Infinity, we do it differently. We spend the time and resources to complete the buyer’s paperwork and validate the loan to a “Fully Approved” status first; therefore, there is very little left to do when a buyer finds their dream home.”

Question: “How important is the interest rate to the monthly payment and total cost of the mortgage?”

Answer: “Not as much as you think. We have all been conditioned to pay so much attention to the interest rate but here is a fun fact: 0.125% in the interest rate equates to about $7.00 per month in monthly payment per $100,000 borrowed. That means that the difference between 3.875% or 4% will only can change a monthly payment by $7.00! What’s more important is the cost to acquire a loan. The term is known as “paying points” and means that to get an interest rate that looks attractive on paper, you will need to pay thousands of dollars in advance to get it. Needless to say, the “fine print” is very important. Make sure you aren’t paying thousands in points up front to save $7.00!”

Investing time to get your loan “Fully Approved” rather than “pre-qualified” can save a buyer thousands, just like DIYs model for Flat Fee Real Estate. Real simple savings – just like DIYs Flat Fee Real Estate approach to selling and buying homes.
Imagine a buyer having the negotiating power of a Fully Approved loan in hand. All they need to do is focus on finding their dream home. The intensive process of getting approved with a time deadline is no longer in the picture. Would this help you navigate through the process of finding your dream home? Will it inspire you as much as DIYs Flat Fee Real Estate model?

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