Buying a Home

What is Mortgage Loan Pre-Approval?

This is my first guest post! I'm pretty excited about it. One of my really great, very reliable, and overall wonderful loan officers took some time to answer some questions about what mortgage loan pre-approval is and how and why to take the time to get one before you look for a home to buy.

I have said time and time again that in this seller's market buyers need to do everything they can to set themselves apart from other offers. A loan pre-approval or pre-qualification is one of those things. 

Without further ado, here is Dan Hubrich with Castle & Cooke Mortgage and his great info! (I'll link to his website below so you can contact him to get started or ask questions.)

What is a mortgage pre-approval?

What is a mortgage pre-approval, how does it work, what is the difference between that and a pre-qualification, and what do you need to know before making an offer on a home?

Let’s start with the basics. One of the MOST important things you can do before looking at homes is to get pre-approved from a lender. Right now the market is extremely competitive and most sellers won’t even let you see the home unless you have a solid pre-approval in hand. Pre-approvals are good for 90 days and are relatively easy and fast to acquire.

The first step in the process is to talk with your lender and to get an application started. The application consists of all of your general info. Name, DOB/SSN, residence history, work history, income, assets, debts, etc. Once we have that info, we will then check your credit and verify all of your income and assets. The next thing a lender will do is they will run your file through Fannie Mae or Freddie Mac’s automated underwriting system online. Regardless of where you get your mortgage, most loans will end up getting sold to Fannie Mae, Freddie Mac, or Ginnie Mae. So because of that, lenders almost universally will go off of their guidelines. If everything checks out with those 3 steps, then the lender will issue the pre-approval letter. The process I just described is actually a “pre-qualification” but most lenders just call it pre-approval.

An actual “pre-approval” is basically all of those same steps with one additional one. A live underwriter will also look over the file quickly to make sure they agree with the loan officer’s assessment and that they don’t see any red flags. Some lenders won’t do that because it’s one more step but at Castle & Cooke we are happy to if needed. Generally it’s not necessary but on tricky files where there are a few moving parts I will always do that by default just to make 100% sure that you are safe to proceed.

That's loan pre-approvals in a nutshell. For more info contact me or Dan using the links below.