What is the difference between pre-qualifying and pre-approval?
Given the current state of mortgage lending, knowing where you stand credit wise is even more important now than ever.
A pre-qualification is normally issued by a loan officer, who, after interviewing you, determines the dollar value of a loan you can be approved for. No credit checks are done, no employment history taken, nothing is submitted to an underwriter. However, loan officers do not make the final approval, so a pre-qualification is not a commitment to lend. After the loan officer determines that you pre-qualify, he/she then issues you a pre-qualification letter. In times past, before houses were selling very quickly (between 1997-2005) we used pre-qualification letters. However during the peak seller’s market pre-approvals (explained in the next paragraph) became the standard in the Greater Hudson Valley Region.
It is important to note that in truth anyone can be “pre-qualified”. Your realtor can do it for you, they simply have to know the lending guidelines. [Read more...]