Pre-approval vs. Pre-qualification!

One of the most common reasons for a real estate transaction to break down before closing is due to the loan not being approved.  The buyer thinks that they are approved but the problem is the lender often issues pre-qualification and pre-approval letters based on limited information.  The lender pre-qualifies them on nothing more than what the client tells them their income is.  In addition they sometimes don’t run a credit report before issuing a pre-qualification letter.  This is changing some with the fallout of the subprime industry this last spring.  This makes it even more important that a lender get you totally pre-approved. 

If you think you are pre-approved but have not provided the lender with income and asset documentation you are not approved.  A true approval, unless for a specified no document program, will require income and asset documentation and credit reports are required on all loan types.Being pre-approved gives you an edge when you start looking for you home.  If you get in to the situation where there is more than one offer on a home it is often the person who has been pre-approved who will get the home.  I have even had the situation where the other offer was a little more but my seller preferred the person who had a true pre-approval.

What is a Pre-Qualification?

A prequalification is simply a meeting between a loan officer and a customer to determine what the mortgage needs of the customer are.  Income and assets are not verified.  The credit report may or may not be pulled.  The information is not submitted to an underwriter.  The lender does not receive enough information to make a credit decision.

What is a Pre-Approval?

Pre-approval includes a complete loan application.  A credit report is pulled and asset and income are verified.  The information is submitted to underwriters for “credit only” decision.  Once you have been pre-approved your credit package can be used with any property.  Final loan approval will be subject to the underwriter approving the property only.  A pre-approval is normally good for 90 days.  The borrower receives a written pre-approval letter.
For all your Spring/Tomball/Magnolia TX Real Estate needs, contact me today! Marchel Peterson Results Realty Cell: 832-721-8332

© 2017 Houston Association of Realtors All rights reserved. Information deemed to be reliable but not guaranteed. The data relating to real estate for sale on this website comes in part from the Broker Reciprocity Program. Real estate listings held by brokerage firms other than Results Realty are marked with the BR logo and detailed information about them includes the name of the listing brokers. Listing broker has attempted to offer accurate data, but buyers are advised to confirm all items. Information last updated on 2017-06-23.

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"This is our second time purchasing a home with Marchel and our first time selling a home with her. She is always a pleasure to work with. We will be returning to her again next time we decide to move. Thanks Marchel!! " Kyle and Rachel Watkins
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