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Mortgage Lender in Illinois asks ~ Do you want a pre approval or pre qualification?

Do you want a pre approval or a pre qualification?

What's the difference?

A pre qualification will tell the Realtor that you have talked with a mortgage lender, given your income, current debt information and how much you will be using for down payment. The seller of a home you may be interested in purchasing, would prefer you to be pre approved.

A pre approval will tell the Realtor and the seller that you have provided much more than just the basics.

A pre approval should require you to provide documentation and the approval from you to pull a current credit report.

You should provide the following information to your lender to get a pre approval.

current pay stub with year to date earnings
the last 2 years of W2's
recent bank statement (showing where the money for the down payment is coming from, or reserves if necessary)
current statement of any additional assets you have including 401K, stocks, bonds etc.

When looking to buy a home it's important to see what you can afford and what payments you will be comfortable with on a monthly basis.

Your offer on a home will be much stronger with a pre approval than a pre qualification!

Pre Approvals available for Illinois homes. Kim Murphy, 1st Advantage Mortgage

Helping Illinois finance homes for over 10 years.

DuPage, Kane, Lake and Cook Counties

Posted by Kim Murphy | Mortgage Loans in DuPage, Kane, Cook, Lake, Will Counties Illinois on 06/26/2007 11:39 PM

Comments (20)

pre approval, pre qualification, mortgage approval, home loan

This post has been included in Illinois Information Du Page County, IL Information
Post is included in group: Illinois Mortgage Professionals

20 Comments on Mortgage Lender in Illinois asks ~ Do you want a pre approval or pre qualification?

JUN

2007

KIm, Pre Approval for sure, Pre Qual it is just an idea, but to make sure that everything can work better, Pre Approval :) good blog :)

JUN

2007

Ray... I agree pre approval is the way to do it! As always thank you for checking in!

Kim, unfortunately pre-qualifications totally devalued here in California. It is nice to have one, but it doesn't have an impact. You really need a pre-approval to compete (yes we still have multiple bids on selected houses in selected locations). Just don't forget that with lenders -everything is conditional until they fund it. Doesn't matter how many conditional approvals you received before. Lenders check the job information, income and assets on the day of funding. So, if anything changes in a Buyer's situation prior to funding - the funding, either gets delayed, or doesn't happen at all.

Artur... I agree everything is conditional until its funded, however the loan officer should be asking all the necessary information to make sure it will fund. We only verify job again just prior to funding here. Hopefully the buyer will not jeopardize that prior to funding, if so there really isn't much anyone can do about that. Thanks for weighing in!

Kim, you are definitely right. This is why I emphasized pre-approvals. The part on lenders just happened. I simply continued my rant!

Pre-approval is clearly the desired and best scenario - but that depends on when the buyer plans to close escrow. If the escrow is slated to close 90 or more days out than a pre-qual letter with regular communication and check-ins would be best.

There is never a one size fits all scenario.

Pre-approval - without a doubt.

Pre-qual means nothing! It's actually turned into a joke, really.

Kim, Great info.... I had one of my Realtors call me who was representing the seller and ask what a "Letter of Commitment" was....(not a loan commitment) I will keep "G" rated what I told her... so you can guess what I said..:-)

A pre approval is definitely a better option however the sellers must realize that even a pre approval isn't a 100% done deal. All loans are conditional. It has never happened to me, but I have heard of stories about the lenders calling a buyers employer the day of settlement, only to find the buyer quit his job he used to qualify days before. What I'm trying to say is..... ANYTHING CAN HAPPEN!

Great Post Kim!! This one needs to be shared with the buyers though...it seems they are the ones who get confused about "how approved" they are. NICE JOB!!

I think the average seller/consumer has no idea what the difference is between the two...

Marc - you are right, but Kate has a point. You cannot pull the FICO score to often, as it negatively impacts the score. Definitely - there is no one solution. And as Michael said - Anything can happen (with loans)!

Arthur-

You are right about the multiple pulls - as long as they are outside of the 14 day (could be 30 now) window.

Of course to do the pre-approval, the credit would be pulled once, but ONLY once.

A 'pre-qual with regular communication' is still pre-qual and as such is pretty much worthless.

Now, we may just be getting into semantics - but in my part of FL if it's not a real pre-approval, it doesn't count.

Marc, the same here in California. Pre-qualification is of not much (if any) value.

Kate... Usually the documentation does not expire for 120 days. I always tell my clients as long as you do nothing to change the situation, they pre approval will still hold. If you change something, you need to let me know ASAP!

Trevor... I totally agree, which is why I posted this, hopefully the average consumer will see this and know the difference and what the required documents are!

Susie... I agree, like I told Trevor, hoping the buyers see this!

Thanks for stopping by!

Marc and Artur... I think we all agree the pre approval is defiantly a better way to do it. I am hoping the buyers see this post and now know the difference and how the pre approval has more validity to it. But also that changing your pre approval by quiting your job or buying a car mid stream can really change the pre approval.

Matthew... I can only imagine, sounds like something worth even less than the pre qual.

Michael... I think it is as close to done as you can get as long as they don't change things on us!

Thank you all for weighing in, this has been a topic of discussion by many....I am hoping buyers will know the difference!

To us...most pre-quals aren't worth the paper they are printed on. We kind of laugh when we get pre-qual's with offers. We have found some lenders to do pre-qual with no legitimacy to them. They just issue them hoping to get the business. We always go for the pre-approval......but then you already know that!!! :)

Rick and Lynn... As always thank you for checking in! Pre approvals are for sure the way to go!

JUN

2007

no one should issue anything unless they are sure what is being isued can be backed up

its just a big waste of time

Dominick... I couldn't agree more! Thank you for weighing in!

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