Yesterday I was conducting a class to a group of Realtors on credit and credit reports for continuing education credits. The subject of pre approvals came up and how worthless they can be. If you ask your lender the following questions you should be able to determine if your pre approval is valid or junk. This can save you a lot of time and a lot of heartache.
•1. Did you run a credit report?
•2. Did you see their pay statement (or income taxes if they are self employed)
•3. Did you see their bank statements (if the pre approval is taken by phone they can be emailed or faxed)
•4. Did you check the parameters (income levels or loan amounts) for the program you are using
•5. Did you run this through DU (Fannie Mae) or LP (Freddie Mac)? DU can be run for FHA and VA loans
There you go 5 simple questions. None of them ask personal information about the client's finances. If the answer to all of them is yes you should have a deal. If any of them are NO well you really do not have a valid approval and you might want to consider asking another loan officer.