Is a “pre-approval” really a pre-approval?
Wednesday, January 20, 2010
This topic came up yesterday during a meeting with colleagues. From a Realtor’s perspective, these so called “pre-approvals” that perspective buyers are receiving from lenders are what we call a pre-qualification. Pre-qual’s do not mean squat to a real estate professional that is sifting through offers.
A pre-qualification is merely the maximum loan amount one could receive based on the information provided on their loan application.
A pre-approval is where a loan officer has receive all documentation from the applicant and have verified all income requirements, FICO scores, debt to credit ratios, etc.
When one receives an actual pre-approval letter, it should only have 3 contingencies:
- Ratified purchase contract for real property.
- A satisfactory appraisal of said property.
- Preliminary title report.
In conclusion, not all “pre-approvals” are created equally. Choose your lender wisely.
I have some links to my Preferred Lenders on the front page of this website.
