Get Prequalified For a Home Loan

By
Real Estate Agent with Compass
https://activerain.com/droplet/4Rdj

Prequalified for a home loan.  What does that really mean?

Prequalified for a home loan means that the borrower has actually spoken to a loan officer either in person or over the phone and based on the information a borrower has given to the loan officer.

Getting prequalified for a home loan is the first step in the mortgage process, and it's generally fairly simple. It's also the first step when thinking of purchasing a home.  This gives you a guide as to what price range you should be looking at online or with a Realtor.  The Borrower supplies a loan officer with your overall financial picture, including your debt, income and assets. After evaluating this information, the loan officer can give you an idea of the mortgage amount for which you qualify. Pre-qualifing for a home loan can be done over the phone or on the internet, and there is usually no cost involved. Prequalified for a home loan does not include an analysis of the borrowers credit report or an in-depth look at your ability to purchase a home.

Getting prequalified for a home loan allows you to discuss any goals or needs you may have regarding your home loan. At this point, a bank or mortgage company can explain your various mortgage options and recommend the type that might be best suited to your situation.

Because it's a quick procedure, and based only on the information you provide to the loan officer, your prequalified for a home loan amount is not a sure thing; it's just the amount for which you might expect to be approved. For this reason, a prequalified buyer doesn't carry the same weight as a preapproved buyer who has been more thoroughly investigated

To Get Prequalified For A Home Loan

Happy Trails,

Donnie

 

 

 

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Texas Tarrant County Fort Worth
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Rainmaker
1,268,229
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi
NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 - New Lenox, IL
708.921.6331 - 40+ yrs experience

Donnie:  You're right .... the Pre-Qual can be fairly easy.  The Pre-Approval?  That gets much more detailed.  And Rob above is right.  Few Lenders of any merit in my area will provide a written Pre-Approval Letter if a thorough evaluation has not been done.  Even to the point of running it through automated.  It definitely helps when clients are aware of these differences and have correct expectations attached to those conversations they are holding with us.  Just fewer frustrations on their part.

I also like that you promote actual contact with a Lender within your post.  That Lender is lucky to have such a loyal agent ...

Gene

Feb 07, 2014 10:39 PM #5
Rainmaker
176,884
Donnie Keller
Compass - Fort Worth, TX
Reata Realty Group At Compass

I also wrote a blog on Pre-Approval which is much more important than the pre-Qual.

Feb 07, 2014 10:57 PM #6
Rainer
47,750
Kim Norton
CREATIV Real Estate Solutions - Bentonville, AR
Selling Northwest Arkansas

Great info!

Feb 07, 2014 11:13 PM #7
Rainmaker
428,366
Matt Brady
Finance Of America - Del Mar, CA
The Mortgage Answer Man

Given all the regulatory changes and the creativity of CPA's, having a lender partner that provides pre-approvals will save you and your clients grief. Having a lender partner will save you grief. Encourage your clients to jump through the hoops required by regulation EARLY in the process. It is a lot easier that trying to collect conditions 20 days into the process and creating unnecessary stress.

Feb 07, 2014 11:22 PM #8
Rainmaker
2,546,332
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

Yes to this post and subject matter

Feb 07, 2014 11:34 PM #9
Ambassador
1,281,927
Jason Crouch
Austin Texas Homes, LLC - Austin, TX
Broker - Austin Texas Real Estate (512-796-7653)

Well done here. Unfortunately, many people use the terms interchangeably, so it gnerally requires more investigation to determine whether it's a simple pre-qual or a pre-approval. 

Feb 08, 2014 12:09 AM #10
Rainer
371,064
Dwight Puntigan
DRP Realty, LLC - Saint Peters, MO
Dwight Puntigan

My clients credit union does not give a pre approval and certainly has me worried.

Feb 08, 2014 02:28 AM #11
Rainmaker
675,422
Bill Reddington
Re/max By The Sea - Destin, FL
Destin Florida Real Estate

Being pre qualified or pre approved is a necessity. Unless someone is paying cash before they get in my car they will be pre qualified.

Feb 08, 2014 04:59 AM #12
Rainmaker
1,989,493
Andrew Mooers | 207.532.6573
MOOERS REALTY - Houlton, ME
Northern Maine Real Estate-Aroostook County Broker

So important to save everyone emotional upheavals and gas, time, money. Expectations, establish them earlier. You are going to end up at a bank before the sale is over right? Bring them in earlier on. Upfront. Make them a needed partner unless peeling off the cash!

Feb 08, 2014 05:19 AM #13
Rainmaker
846,276
Barbara Altieri
Kinard Realty Group Fairfield and New Haven County CT Real Estate - Shelton, CT
REALTOR-Fairfield County CT Homes/Condos For Sale

Donnie -- Not the same as a pre-app and this explains the exactly what a pre-qual means very well!

Feb 08, 2014 05:29 AM #14
Rainer
103,157
Rosie Moore
Serving Sugar Land, Richmond, Rosenberg, Missouri City - Sugar Land, TX

I did a similar post differentiating pre-approval vs. pre-qualification.  Buyers need to know the estimated amount they are pre-approved for before looking at properties. 

Feb 08, 2014 12:19 PM #15
Rainmaker
2,846,609
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

Good luck to all the searchers! I agree—know your amounts. :)

 

Love and light,

Laura

Feb 08, 2014 03:17 PM #16
Rainer
145,030
Jeffrey Hogue
Weichert Realtors Neighborhood One - Wyomissing, PA
Berks County Real Estate Pro

Get pre-qualified and stay qualified. That should be in there somewhere.

Feb 08, 2014 03:50 PM #17
Rainer
6,553
Mary Beth Bellomo
Rock Hill, SC

Lesson #1 for the grasshopper Realtor - DON'T TAKE BUYERS OUT WITHOUT GETTING PREAPPROVED FIRST !!! It's a lesson I see so often that must be learned the hard way. Once learned, it's never forgotten !

Feb 10, 2014 11:36 AM #18
Rainmaker
323,365
Fred Cope
Reliant Realty in Nashville, TN - Nashville, TN
Looking For Homes With A Smile

Donnie, how are you?

Question: Why would I, a REALTOR®, want to plan my day around a "what-if" and a "maybe"?  That is all a pre-qual is

Why would a MLO not take a few minutes more to review the paystubs, w-2s, bank statements, then pull a credit report, and run a spreadsheet (or even better--run it through DO or LP) before he calls me back?  Then he has something on which to hang his hat.  You and I know that loan applicants are subject to getting a big check once, use it to say "I make $xxxx.oo per week."  Amnesia causes them to forget that payroll deducted loan, and it slips their mind to mention that they are a little short on downpayment money; but they are chomping at the bit to get you out showing houses [after all, what else do you have to do today?]. 

An experienced MLO can almost smell a viable homebuyer.  When you find that MLO, you will remember his name and phone number.  If not, keep looking--it will pay dividends.

Another sound principle to observe: If the applicant is too busy to assemble those items and get them to the MLO, then make yourself too busy to show them houses today.  How long does it take to scan and email those items?  I learned these things through to University of Hard Knocks (a/k/a 25 years in mortgage lending).

Feb 10, 2014 12:06 PM #19
Anonymous
Donnie Keller
I understand what you are saying. I'm simply trying to point out the difference between prequalified and preapproval. Most home buyers or sellers don't know the difference.
Feb 10, 2014 06:55 PM #20
Rainer
148,634
Manuela Baginski
Coastal Properties Group/Christie's International Real Estate - Tierra Verde, FL
bilingual Real Estate Professional in Tampa Bay

Great tips to understand and remember! Thanks for the clarification.

Feb 11, 2014 01:04 AM #21
Rainer
148,634
Manuela Baginski
Coastal Properties Group/Christie's International Real Estate - Tierra Verde, FL
bilingual Real Estate Professional in Tampa Bay

Great tips to understand and remember! Thanks for the clarification.

Feb 11, 2014 01:04 AM #22
Rainer
120,793
Steven Brand
Hancock Mtg Partners - Stillwater, MN
NMLS# 261849

Dwight... recommend (strongly) that your shopper get a written pre-approval from another lender if the CU won't.   They don't HAVE to use lender #2... but odds are they may decide to work with a referral of yours if they're not so black/white and explain how the "mortgage world" works today.

Feb 11, 2014 06:01 AM #23
Rainmaker
323,365
Fred Cope
Reliant Realty in Nashville, TN - Nashville, TN
Looking For Homes With A Smile

Hello Donnie, I wasn't challenging your post, and sorry if it came across that way.  I just do not see any value in a "pre" qualification.  I would expect an experienced loan officer to provide me with something more substantial than a letter that, in essence, says "IF the buyers told me the truth..." 

I think there is a better way, and it has worked for me more than a quarter century.  I can just see my top broker client, Gordon Weaver saying, "All I want to know is can they or can they not buy? I don't want no 'who-shot-john.'  Just tell me--can you get them a loan or not?"  Perhaps I'm too old school, but I still mount a horse the say way I did when I was a boy (well, some modification--I learned that running up behind those animals and doing a rear mount isn't too smart).

 

Feb 11, 2014 12:56 PM #24
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Donnie Keller

Reata Realty Group At Compass
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