Home Mortgage Rates

Home Mortgage Rates

Are you tempted to sell your own home?  Have you prepared yourself to screen potential buyer? Well, you are in for a decent amount of work to sift through pre-approved vs pre-qualified buyers.

For years we have been marketing  bank-owned (REO) properties and you would think by now most Real Estate Agents who should be able to distinguish between a Pre-Qual from Pre-Approval.  But they do not.

And since you are selling your own home without the help of a Real Estate agent, then you should be able to spot a qualified buyer from a mile using the definition of these two approval types.

Pre-Approval:  Pre-approval process is like a purchase loan application without having a property identified.  To develop a pre-approval most reputable lenders require a a completed and signed 1003 Mortgage Loan Application by everyone who is going to be on the loan for the home purchase.  This application identifies the Employment, Bank Accounts, Assets and other Real Estate held by all applicants.

The  lender is authorized to complete Employment and Asset Verification as part of their due diligence before then can issue a pre-approval.    The final step in the Pre-Approval process is to determine the borrower’s buying power and how much loan they could afford.

Once Mortgage Loan Application is processed by the underwriters at the bank, the resulting Document is a Pre-Approval which is only conditioned on the value of the property the borrowers can afford to purchase.   In other word, the loan approval is only conditioned on the price of the property that the buyers identify.  Pre-Approval could also identify the loan Number, Rate and term of the loan as well.

Pre-Qualification:   Pre-Qualification is a sample letter that is issued by some lenders without the benefit of  Mortgage Loan Application processed.  Mortgage Brokers, Correspondence Lenders and loan officers issue these Pre-Qualification letters and they are not worth the paper they are printed on.  Since no employment and asset verification are completed, most lenders refuse to accept these Pre-Qual letters.

So, your Mortgage lender or Loan Officer has not asked you to complete a mortgage loan application identifying your employment, bank accounts and assets; they are not a qualified buyer specially in this market where you would be competing with cash buyers.





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