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    Email: joe@joemetzler.com

  • Mortgage Pre-Qualification versus Mortgage Pre-Approval

    Getting an initial Mortgage Pre-Approval BEFORE you speak with a Real Estate Agent just makes sense. A good first step is to complete the online application, or speak with a Cambria Mortgage Loan Officer who will help you determine what loan programs are available to you, how much home you can afford, what the payments might look like, and how much money you'll need to make it all work. This will ensure that you begin your search as an educated buyer, and can talk confidently with your Real Estate Agent about an appropriate home search.

    Understand the differences in Approval

    Pre-Qualification

    Mortgage pre-qualification is a quick assessment to determine whether your income, credit, and debt-ratio may fit current home mortgage loan programs, and provides you with a looks good estimated amount of what you may be able to borrow. A pre-qualification generally means a lenders at least spoken to you on the phone, they may have taken some basic application information, may or may not have reviewed credit, and gone over some basic program options, but you have NOT supplied your supporting documentation for full review. No approval letter is given at this stage. There is no commitment to lend, and no interest rates can be locked or guaranteed. There are no obligations for an initial review of your qualifications.  This is more of your talked to a lender, who said it sounds OK, but nothing has officially been done.

    Standard Pre-Approval (most common)

    Mortgage pre-approval is a full financial evaluation that involves a full application, your credit is review, and an initial evaluation of your supporting documentation, including pay stubs, tax returns, bank statements, W2's, etc. Generally the lender will also run your application through the automated underwriting systems of Fannie Mae, Freddie Mac, FHA, VA, or even USDA to get a basic approval. No underwriter has reviewed or signed off on your application yet

    An approval letter can be prepared and given to your Real Estate Agent at this time as a sign of confidence that you are a serious home buyer, and that a mortgage company has reviewed your information. A pre-approval letter is not a loan guarantee, but it shows there is a very strong likelihood of final loan approval. This type of pre-approval can be done in a few hours.

    Full Underwriter Pre-Approval

    In a full underwriter pre-approval, the lender does all of the steps of the standard Pre-Approval, but also takes the additional steps of sending your file to an underwriter, and obtaining all the necessary fraud reports, verification's of employment, tax return verification's, and more. This type of pre-approval can take two to three weeks. Once you find the exact home, the lender will still need to obtain an appraisal on the house, and obtain a title commitment from a title company. This full underwrite is clearly better than a standard pre-approval, but is also really only necessary on a small number of applications that may be marginal in nature, and the lender wants an underwriter to sign off early in the process. Few lenders do this on a regular basis, as they need to increase rates to cover all the extra costs and staff reviewing applications that may not ever close. 

    FINAL UNDERWRITING

    Final underwriting is when you've decided to move forward to actually get a loan. This means you've either said yes for your refinance, or you have a successful sales contract with a closing date (you bought a house). Before we can proceed, you need to sign the full application packet of documents. This includes the actual application, Loan Estimate, Appraisal Authorization, and an Intent to Proceed.

    An interest rate can now be locked and guaranteed.

    Upon receipt of your signed application, the lender begins the full underwriting process, including ordering the appraisal, a title commitment, and putting your application in front of an underwriter for full review. You will need to pay for the required appraisal at this time. Most people put it on a credit card.

    During the underwriting process, it is very common for the lender to ask for additional information. This is not a sign that there is anything wrong. Once the underwriter has been satisfied that your application meets all guidelines, your application will become Clear-to-Close.

    Once your application is clear-to-close, your file still needs to go through a few more regulatory compliance verification's, finally being sent to the lenders closing department. These are the people who will prepare all the legal loan documents you will sign and closing, and who will send the money to the title company on your closing date. 

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