Underwritten Pre-approval

[Anonymous]

Just when I thought I understood the difference between pre-qualified vs. pre-approved and was doing the right thing.....I got thrown for a loop. Now confused again.

I contacted a lender, recommended by a co-worker. They have been responsive and answered many question before I even applied with them. I decided to go ahead and get pre-approved. They sent me a list of things I needed to have for the pre-approval. Bank statements, W2s and 1099s, 2 Years Tax returns, Investment/retirement account statements, work history and contact phone number, contact for my insurance agent, and fill out a loan application. They also ran my credit report.

A day or so later they called and said they had approved me for the amount I asked for and had my pre-qualification letter ready. I then stated that I was not seeking a pre-qualification I wanted a pre-approval since it was stronger. So they said they would have to run my file through the underwritter. I agreed. They said they would send me the pre-qualification letter that I could use in the mean time until I waited for the pre-approval.

I get the letter and it says that I am pre-approved for xx amount and that Ihave a good credit and employment history along with liquid assets. That the pre-approval was conditional on a signed contract, appraisal, and loan documents. I was confused because on the phone they said pre-qualification, then sent me a pre-approval letter. I emailed my LO and said I I must be confused and explained they called it a pre-qualification and then I get the pre-approval letter. He said well it is a pre-approval since it was sent through automated underwriting system and backed by all the documents I sent to them. So I again asked why did we send it to the underwritter then if what you sent me was a pre-approval. He said that it would be a stronger pre-approval and even cut down on time later when I do go under contract.

The thing is, I am not sure I will even use them for the actual loan. I am wanting to do a new build and I might choose to use the builder's prefered lender just to get some incentives. I am just not sure yet. Was it the right thing to do to have them send my file to the underwritter? If so, then should I wait to get that pre-approval before I start looking or can I use the first "pre-approval" letter to begin?

[oldman425]

If you see the verbage "pre-approved" you are set to start looking.  I ran into an issue with NFCU because their letter stated pre-qualified and the seller's agent wouldn't believe that we were actually "pre-approved".  Our LO had to explain to the seller's agent that the "pre-approval" would be issued once we were under contract.  Odd but it worked in the long run, once the appraisal comes in we are golden.  (I hope)