This is a guest blog post written by Rebecca Madej, Branch Manager and Mortgage Consultant with Cunningham & Company Mortgage Bankers, in Charlotte, NC
Mortgage Pre-Approval vs. Pre-Qualified?
You’re shopping for a mortgage and keep hearing ‘pre-qualified’ and ‘mortgage pre-approval’ but what do they mean? They both sounds like the ‘before’ to something…but what?
In my world, pre-qualified means that possible loan strategies have been discussed with a borrower but credit and other verifications have not been done yet. This will sometimes happen when a client doesn’t want their credit pulled just yet or doesn’t want it pulled again and is shopping lenders. Just like the word says, this step occurs before someone is qualified for the loan/terms discussed.
A mortgage pre-approval is more in-depth because some verifications will be done. Almost always the first step towards a preapproval is the loan officer reviewing the credit report. It is at this point I will often run an automated underwriting engine on the file to confirm that the borrower meets program guidelines and is likely to be approved. For an offer on a home, buyers should have a mortgage preapproval letter to confirm that they qualify for the home and to strengthen their offer to the seller.
Cunningham & Company’s “Buyer Ready” Program
To take things a step further Cunningham & Company offers a Buyer Ready Program. Our Buyer Ready Program is designed to help home buyers get an early start on the mortgage process by securing credit approval while shopping for their new home. Clients provide their income and asset documentation and their file is reviewed by our underwriting team. This way the buyer receives an approval where the only items outstanding for final approval are the contract, appraisal and signed disclosures.
The final step towards loan approval is to submit the file with an appraisal and supporting documentation to the underwriter for review. It is at this point that final loan approval is given and the borrower can close.
Should you have questions on getting a pre-approval letter that will result in a closing, give me a call. I’d love to answer any questions you have.
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Rebecca Madej is a Charlotte mortgage banker who excels at helping clients choose the appropriate mortgage strategy and enjoys demystifying the financial process on her blog at rebeccamadej.com. She publishes a weekly “Mortgage Matters” e-newsletter and can be reached at rebeccam@cunninghammortgage.com or 704.488.8883.
