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Pre-Approved for a mortgage or pre-qualified

Posted on June 3, 2011 by Ray Williams (NMLS #216267).

So I took a recent survey of Real Estate agents in Denver to find out if they prefer their clients to be pre-approved or just pre-qualified. To better understand you need to know the difference of the two.

In a nutshell a pre-qualification is totally verbal and has pretty minimal validity to it. In today’s ever changing mortgage place , your lender needs to confirm critical aspects of your ability to qualify.

  • Are there any write-offs you may not even be aware of on your tax returns?
  • Are there any disputes on your credit report?
  • How does your actual income flow to your paystub (we use different calculations for many situations depending on how you are paid)
  • Are there unsourced deposits in your bank account?
  • Is the credit  score your giving them a FICO score or just one you paid to access?

If you just told a lender I make $50K, and have a 750 credit score , minimal debt, money for a down payment….. One would think you could get “pre-qualified”. And by a lazy or inexperienced lender you will.

If the lender doesn’t physically review your documents, then the pre-approval letter they send your real estate agent for your mortgage is worth nothing.

Out of the Denver Real Estate agents I surveyed ALL of them want to have a lender who has already physically reviewed your documents for full blown pre-approval before they write an offer on your desired house. Even if it takes a little longer. They don’t like or want verbal pre-qualifications in today’s market.

My advice; plan ahead, and respect what the lender is asking for. If they ask for quite a bit upfront it is likely they will save you time once you are under contract and busy with other things.

Ray Williams

303.779.0591 x101

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