PRE-APPROVAL OR PRE-QUALIFICATION..THE WORD AFTER THE "PRE" MAKES ALL THE DIFFERENCE

Have you ever gotten one of those solicitations in the mail that looks just like an actual check? The one that you look at and think your long lost Uncle Sal must have passed and left you a fortune...only to discover that the stupid thing is really only an application for a credit card?

There's a BIG difference between that and an actual inheritance check from Uncle Sal.

Well the same holds true when you are trying to buy a home. In today's market, the "seller" involved is generally a bank. Whether you are involved in a short sale or a foreclosure, there's an unknown guy in a suit deciding whether to accept your offer or not. That guy cares about one thing, and one thing only.... are you actually able to buy the house you are offering on. That's where Uncle Sal's Axiom comes in.

When you apply for your mortgage loan (which you should do before you ever start home shopping), there are two kinds of proof your lender or broker will provide to the bank guy in the suit. One is a pre-qualification, and one is a pre-approval. By in large, one is basically worthless, and the other is gold. The difference is in the fine print. A pre-qualification is when a lender doesn't want to take the time to fully underwrite your loan application. So they give it the once over and come up with an official looking letter. The problem is, it's the loan version of a credit card solicitation. And believe me, the banker guy in the suit knows the difference all day long. It offers no actual commitment to lend. In these cases, your lender wants you to go find a home first, and then they will underwrite your loan. Most brokers and lenders have a convenient version of a "pre-qual" saved as a Word doc template in their computer. Just add your name and the terms of the contract you are offering and..POOF...you're "pre-qual'ed".

However, a Pre-Approval letter is just that. Your entire loan application has been looked at and approved by the underwriter at your loan institution. It has a list of loan conditions you need to meet, maximum interest rates, terms, etc. As you will see below, it looks a whole lot different than a pre-qual. And to the guy in the suit (the one deciding whether to sell you the house you want or not), it looks like gold.

THIS IS A PRE-QUALIFICATION

THIS IS A PRE-APPROVAL

So if your lender or broker won't go to the effort of getting you pre-approved, find another one. Or better yet, call me! I'll do whatever I can to make your offer golden.