Are you Pre-Qualified or Pre-Approved?
When a client tells you they are Pre-Approved for their mortgage are they really?
Know the difference between a Pre-Approval and a Pre-Qualification
Knowledge is Confidence!
Imagine you've invested time and money showing houses to your client and the seller is packing and has plans for the proceeds of his sale. But then the deal goes dead because you thought your client couldn't get the loan they needed.
Here's what happened: They thought they were pre-approved, but they were actually only pre-qualified. Here's the difference.
Pre-Qualification
Pre-qualification entails a basic overview of a borrower's ability to get a loan. The borrower provides a mortgage lender with information about their income, assets, debts, and credit.
But they do not need to produce any paperwork to back it up.
In return they get a rough estimate of what size loan they can afford. This is by no means a guarantee that they will get approved for that loan when they go to buy a home.
Pre-Approval
This is an in-depth process that involves a lender running a credit check and verifying income and assets. An underwriter then does a preliminary review of the borrower's financial portfolio and if all goes well issues a pre-approval which is a written commitment for financing up to a certain loan amount.
Many home-buyers go through online lenders to try to be prepared to shop for their home. The problem is, they didn't actually get pre-approved, they only got pre-qualified. So when they find a home they love and work with you to write a contract, they might not be able to get the loan and close the deal.
I've gathered a lot of experience over the past 25 years and can help your clients get pre-approved so they're ready to sign on the dotted line and you are confident writing an offer!