What is a Pre-Approval
A pre-approval is a genuine loan commitment from a mortgage lender. All the lender needs to fund the loan is a preliminary title report (provided by the title company), appraisal and ratified purchase contract.
When you have been genuinely pre-approved, no additional information is required from you. Your real estate agent will submit the purchase contract, an appraisal will be completed by an appraiser and the preliminary title report will be provided by the title company. All of the remaining documents will be submitted to the lender.
What the Lender Needs from You to Issue a Pre-Approval?
The minimum information any lender will require is
- Copies of bank statements for the previous two months
- Full credit report including FICO score
- Pay stubs from the past month
- Copies of your W-2s for the past two years (if salaried employee)
- Profit and loss statements for current year and tax returns for the past 2 years (if self employed borrower)
What is NOT a Pre-Approval?
If you have not provided your lender with this documentation, chances are you don’t have a genuine pre-approval.
The Paper the Lender Gave Me Says I Am Pre-Approved but They Didn’t Collect Any Documentation
If you have spoken to a lender and they have told you what they think you can afford, or even if they’ve given you a piece of paper that says you can afford a certain dollar amount and you haven’t given them the documentation listed above, you have what we call a pre-qualification. A pre-qualification is nothing more than a best guess from a loan officer on what they think you may be able to afford based on the information you’ve told them.
If It Says “Pre-Approval” Am I Set?
Even if the document they’ve sent you says the words “pre-approval” you need to read all of the fine print to look for words like conditional, additional items required and items not substantiated. If you haven’t submitted the supporting documents to a lender, you do not have a genuine loan commitment, no matter what anyone tells you.
How Can I Get a Geniune Pre-Approval?
It’s simple with our no hassle plan. Call us at (650) 520-0915, email us or try our secure online mortgage application for a free, no obligation consultation. We’ll sit down with you, answer all of your questions and put together all the information you need and get you on your way to a geniune pre-approval today.
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Chris Williamson is a Mortgage Advisor with Mortgage California specializing in San Mateo Mortgage.
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{ 2 comments… read them below or add one }
The pre-approval is only as good as the person that issued it. If they have no clue what they are doing they generally pre-approve everyone in hopes that some close.
Good LO’s know this is a waste of time.
MortgageGuy: Thanks for your comment and I couldn’t agree with you more.
The other day a buyer came to me with a “Buyer’s Certificate” from a big bank which they told him was a pre-approval letter. Of course, none of his income, assets or credit had been verified and they even refused to answer his questions about financing until he got into contract. But, because the buyer had no experience with getting a loan, they weren’t aware that their certificate wasn’t worth anything to a seller. As we’re starting to see multiple offers in San Mateo County again, this certificate could’ve lost him a house he really wanted.