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Are you pre-approved

Posted on October 19, 2016 by Ray Williams (NMLS #216267).

What is the true value of your lender letter and are you really pre-approved?

It is quite disconcerting to see how many lenders at the big box banks are providing lender letters with only a credit report. This only is giving you a false assumption of a pre-approval.  Then there are offers on homes, that they believe they are pre-approved to purchase. In actuality, they are not pre-approved!

When you have only provided “verbal” information on your current and/or past employment, income and living history, and received a pre-approval letter based on just your credit report and FICO score, YOU’RE NOT PRE-APPROVED.  Even if you didn’t provide verbal information but submitted a loan application WITHOUT being asked to provide financial documentation.  YOU’RE NOT PRE-APPROVED!

Typically in worst case scenario is that if your offer is accepted, now your file gets sent to the underwriter (for final approval) and you are at risk of getting denied for the loan.  At this point, you have put your earnest money down and could lose these funds.

It may seem overwhelming, invasive and time-consuming to provide financial documentation to a lender prior to finding a home, BUT, if they are not asking you for these items you need to be cautious!  To you, this may seem less intrusive and you feel better about working with a lender that can get your pre-approval done on the fly,  so you can have a lender letter quickly in order to put an offer on the home of your dreams immediately.

Choosing to go the shorter and easier route isn’t necessarily the smartest and best route you should take.  When something sounds too good to be true, it typically is.

Not being prepared and doing a complete pre-approval not only can waste your time but all those involved.  At no time should you be looking at a home and putting an offer on a home when you haven’t had your financial documents reviewed.

As always, please give us a call or send us a message if you have any questions.

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