Prequalifaction VS Preapproval

Anonymous · ‎01-13-2017

I have posted a couple times on this board in the last couple days. I appreciate all the feedback I have received. There are a lot ok knowledgeable people here. This whole mortgage thing is stressful and we're just begining. So I have a question...

I know the difference between the 2 but kinda of confused with the terms with mortgage. I posted about my husbands income may not be enough due to write offs well they got that taken care of and issued us a prequalifaction but, our app had to go to underwriting first for them to make it the call about the debt to income before issuing prequalifaction. Well like I said we received our letter today.. YaY (I hope)... He told us we could start looking at houses and putting in offers. Is that correct without a pre approval? The letter states that we are prequalified it list the amount we are qualified for and the highest our payment can be etc.... I just don't want to get my hopes up. Do some lenders not do Preapprovals first? My other question is what do we do now find a house put in an offer and if it's accepted is that when they will do an approval. Sorry if this sounds confusing I am confused a little.

Revelate · ‎01-13-2017

@Anonymous wrote:
I have posted a couple times on this board in the last couple days. I appreciate all the feedback I have received. There are a lot ok knowledgeable people here. This whole mortgage thing is stressful and we're just begining. So I have a question...

I know the difference between the 2 but kinda of confused with the terms with mortgage. I posted about my husbands income may not be enough due to write offs well they got that taken care of and issued us a prequalifaction but, our app had to go to underwriting first for them to make it the call about the debt to income before issuing prequalifaction. Well like I said we received our letter today.. YaY (I hope)... He told us we could start looking at houses and putting in offers. Is that correct without a pre approval? The letter states that we are prequalified it list the amount we are qualified for and the highest our payment can be etc.... I just don't want to get my hopes up. Do some lenders not do Preapprovals first? My other question is what do we do now find a house put in an offer and if it's accepted is that when they will do an approval. Sorry if this sounds confusing I am confused a little.

In the current market, as long as the lender's name and contact information is on it, a prequalification ~= preapproval.

That bugged the hell out of me working with Chase ~18 months ago as I'd read preapproval >> prequalification, but for some lenderes prequal = preapproval and in the market the terms have become effectively synomynous at least in my experience.

There used to be a difference I suppose historically, but any seller's agent worth a darn will just call the LO anyway if the rest of the offer looks good: 5 minutes of time to simply find out if the lender is standing behind you or not is a trivial effort when we're talking selling a house.

Anonymous · ‎01-13-2017

Thank you so much for the feedback. Makes me feel a lot better...

StartingOver10 · ‎01-14-2017

Rev is basically right.

You actually have a very strong "pre-approval" because you have been through underwriting already. The next step is to find a property and make sure that the collateral meets guidelines (condition and valuation) and your payments stay in line with the specific property taxes and insurance and HOA (if applicable) for that property.

I have found some lenders will never state pre-approval on their paperwork. Especially big box banks. They don't want to appear like they are committing to making a loan until the commitment is issued IMO. I assume it must be a liability thing because even the commitments today have all kinds of outs for the lender.

Your agent will probably be able to use the fact that you have been through underwriting as a benefit to you in your negotiations. I would.

Anonymous · ‎01-14-2017

Thank you!!!! I appreciate the feed back. You guys are so helpful when a question is asked. It helps to clarify for me because, I was a little down when I didn't exactly receive an pre approval but a prequalifaction. i feel a lot better. Thanks... Please be on the look out for other post from me in the near future as I am Negative Nancy and worry to much and will come here for support with prob lots of stupid questions. I have been reading all these forums for almost a year now rebuilding, credit card approvals, and the mortgage one and I have learned so much with rebuilding our credit to get to this point. Since starting my relationship with the my Fico forums and everything I've learned I have gotten mine and my husbands scores up 30-60 points on each bureau!!!

StartingOver10 · ‎01-14-2017

Fantastic results! 30-60 points on each CRA is a wonderful increase Congratulations!

Remember, there are no stupid questions. Going through the mortgage process is different from getting a loan for a vehicle or other type of credit so it can be intimidating. Sometimes we forget how different it is since we are in the business (real estate or lending).