Home Buying in Tracy>Question Details

Sytha Chan, Home Buyer in Oakland, CA

What's the difference between getting pre-qualified or pre-approved for a loan?

Asked by Sytha Chan, Oakland, CA Fri Aug 30, 2013

They say the first step in the homebuying process is to get this pre-approval letter. I'm not sure if I need a broker or if I should talk to different lenders. Won't lenders need to run my credit to see if I'm qualified?

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12
I would recommend you read Steve Ornellas's blog on the subject.

http://www.steven-anthony.com/GettingStarted

Yes, to get a true pre-approval you will need to have your credit run, but the stronger the pre-approval the better off you will be when you are ready to make an offer in a very competitive market. Find a good loan officer that will walk you through the steps and do a proper assessment of your ability to purchase.
2 votes Thank Flag Link Fri Aug 30, 2013
Hello Sytha, you will need to be pre-qualified to buy which is to be asked a few dozen questions and once you send in the needed documentation you will receive a pre-approval letter to be able to look at and submit offers on homes of your choice. A lender can go by one credit report to issue a lender letter so you can get a few gfe, good faith estimate/fee sheet from them to compare loan programs, rates and terms. A pre-approval letter can be issued within 24 hours of receiving one month paystubs, two month bank statements, 2011 and 2012 W2's, 1099's and 1040's and copies of the applicants drivers license/ID and social security cards.

There are many difference in lenders as many require a minimum 640 fico score and have their own bank overlays on FHA guidelines. You may qualify from a minimum 580 fico score with 3.5% down or even as low as .5% half percent down payment program. The determining factors are your credit profile, debt to income ratios, fico scores and how much you want to invest into the down payment and closing costs. Credit scores can be raised at no cost within 3-4 days to qualify for programs, rates and terms as necessary. Here are a few blogs.

http://www.trulia.com/blog/under640ficoscoreloans/2013/01/ho…

http://www.trulia.com/blog/under640ficoscoreloans/2013/01/wh…

http://www.trulia.com/blog/under640ficoscoreloans/2012/12/ar…

Sheryl Arndt, Real Estate Broker - Sr. Loan Officer CA only
REO & Short Sale Specialist
Credit Repair At No Cost
ALL Loan Programs Available
20+ Years Experience
BRE# 01140252
NMLS# 297251
760-486-4225
9am till 7pm Monday thru Saturday, Sundays by appt.
http://youtu.be/MrygA2_8fAY
If my response was helpful, consider clicking thumbs up or Best Answer!
0 votes Thank Flag Link Wed Dec 11, 2013
Dear Sytha,
Yes you need a "Pre-Approval" letter from a lender. This will involve looking at all your financials, W-2, Tax Returns, Pay Stubs and Debts. Your credit is important as well.
Your Realtor can help you with this, by a referral to their in-house lender. You can also go to your bank and get this from a loan officer there. It's the first step in the Home Buying Process.
0 votes Thank Flag Link Tue Dec 10, 2013
Hello Sytha,

Pre qualification means the lender generates a letter stating that they "may" loan you money based on your credit report and the info you supply them.


Pre approval means the lender is " likely" to loan you money. This is based on your credit report, verification of employment, evaluation of your debt to income ratio, verification of funds for down payment, and closing costs.

Keep in mind, do not miss any payments or obtain any new credit/charge accounts once you get pre approved. If your score changes some it may effect the pre approval.


Much Success to You!!!!!


Best Regards,
Kawain Payne, Realtor
Prudential California Realty
0 votes Thank Flag Link Tue Dec 10, 2013
Hello Sytha, the difference is just being asked the questions is pre-qualifying you and when you submit the documents such as paystubs, bank statements, tax returns, etc. to verify the numbers would be pre-approved and could then be issued a pre-approval letter to be able to look at and submit offers on homes of your choice. The possibility of different lenders will depend on your credit profile, debt to income ratios, fico scores and how much you want to invest into the down payment and closing costs?

A broker will be able to offer all programs available as we are a brokerage whom are approved with 25 banks to be able to offer all the loan programs available from one source. A direct lender will offer only what their company offers and many lending institutions require a minimum 620-640 fico score. Do you need someone whom specializes in Over and Under 640 Fico Score Loans and offers credit repair at no cost to raise fico scores to qualify for programs, rates and terms as necessary? We can raise fico scores within 3-4 days in most cases.

You may qualify FHA 10% down with fico scores between 500-579 and minimum 580 fico score with 3.5% down or even as low as .5% half percent down payment program. You may consider 3% down conventional with a minimum 700 fico score and 5% down conventional with NO Mortgage insurance (Lender paid MI) with a minimum 620 fico score.

http://www.under640ficoscoreloans.com/Pages/ContactSheryl.aspx
Sheryl Arndt, Real Estate Broker - Sr. Loan Officer CA only
REO & Short Sale Specialist
Credit Repair At No Cost
ALL Loan Programs Available
20+ Years Experience
BRE# 01140252
NMLS# 297251
760-486-4225
9am till 7pm Monday thru Saturday, Sundays by appt.
http://youtu.be/MrygA2_8fAY
If my response was helpful, consider clicking thumbs up or Best Answer!
0 votes Thank Flag Link Thu Oct 3, 2013
Pre-qualifed is basically sitting down with a mortgage professional, and "telling" them that you have good credit and sufficient income. Afterwards, they'll say "Yeah sounds like you should be OK - here's a pre-qualification".

Pre-qualifications today are worthless and no seller, especially not REO properties, will accept them as proof of your ability to ultimately obtain a loan.

A pre-approval is issued after your credit has been run, and your lender has reviewed all of your debt, income, and others factors pertaining to your financial situation, in detail.
0 votes Thank Flag Link Thu Oct 3, 2013
For many new homebuyers, the terms pre-qualification and pre-approval seem interchangeable. But they are not — and the distinction is an important one.

When you get pre-qualified, I perform a quick check to determine generally how large a home loan you can afford. Essentially, when a buyer is pre-qualified, the lender is saying it would most likely approve the buyer for “x” amount.

In order to get pre-qualified, you’ll need to provide me with some basic information on gross monthly income, other reliable reoccurring income, the balances and payments on current debts, and how much money has been saved for a down payment. Qualifying ratios are applied to those figures to determine what percentage of your gross monthly income can be used to pay for the home loan and attached expenses.

Pre-approval goes much deeper. In order to issue a pre-approval, I need to examine and verify your debt, income, savings, assets and credit report to ensure you can repay the loan amount. Where pre-qualification is a sort of educated guesstimate of the buyer’s purchasing power, pre-approval says the prospective lender would definitely be approved for the loan.

This is particularly useful when home shopping for multiple reasons. To begin with, pre-approval instantly lets you know what your actual budget is. When you begin home shopping, knowing what you can afford from the outset will help you and your real estate agent better focus your efforts to find the best home for your money. It sets the scope of your home-buying strategy.

Once you find a home within your budget that you like, being pre-approved provides you with an advantageous position over other buyers, because pre-approval assures the seller that you have access to the loan necessary to back your offer. I will provide you with a letter or certificate demonstrating that you are pre-approved for a certain amount of money, which you can provide as part of your offer.

Would you, a relative or a friend like to learn more, or get pre-qualified or approved for a home loan at no cost? Please contact me and I will be happy to help you!

Omar Khamisa
Mortgage Loan Manager

quality-expertise-service-Mortgage lending solutions

Omar@MSJMortgage.com
NMLS#: 369325
Office: 925-365-MSJM
Cell: 510-648-5535
Fax: 510-751-4823
Web Reference: http://msjmortgage.com
0 votes Thank Flag Link Mon Sep 2, 2013
Hi Sytha,

Gregorio (thank you) has provided the link I would have responded to your question with.

In addition, please also take a look at:

"Retail Banks vs. Mortgage Broker/Bankers":
http://tinyurl.com/6qln6nd


If you are serious about buying I would highly encourage you try and close escrow before the end of this year for the reasons covered in this video post ( See: 29 seconds to 5:37 )

“January New Fannie Rules Defined”:
http://tinyurl.com/na2ejy3

-Steve
0 votes Thank Flag Link Sat Aug 31, 2013
Hello Sytha,
A Pre-qualification means you have discussed your credit worthness with a lender and the lender gives you an idea of how much they will lend you. There is no underwritting to determine your actual credit worthness. Most sellers and sellers agents will not accept a Pre-qualification to purchase a home.

A Pre-Approval means your lender has not only discussed your credit worthness with you, they will also run a credit check on you. Also most good lenders will also run your information by underwritting to make sure you are credit worthy. Most sellers and sellers agents require a Pre-Approval to purchase a home. The Pre-Approval let's the seller know you are credit worthy and your loan has a very high degree of being approved by the underwriter.

If you need help with acquiring your Pre-Approval give me a call or email me. I work with most of the local lenders. Have a great day!

jkeating@pmz.com
209-603-9326
0 votes Thank Flag Link Sat Aug 31, 2013
I can certainly help you out there. You can call me at 408-352-5147 or email me at AGreer@themortgageoutlet.com. You can check us out at http://www.TheMortgageOutlet.com. I will look at your situation and present you with some options.

Alex Greer
NMLS #1056079
0 votes Thank Flag Link Sat Aug 31, 2013
Pre-Qualified: You talk to a lender, tell them how much you make, what your expenses are and how good you think your credit is. The lender takes your word for it and gives you an idea of how much they will lend you.

Pre-Approved: The lender looks at your credit report, tax returns, pay stubs. They certify the information, often sending the info to an underwriter who will often also confirm your employment. They tell you how much they will lend you.

Pre-approved is the standard now. When sending or receiving an offer on a home I always look at the pre-approval letter. If a buyer does not have full underwritten approval I often tell them that the offer won't be fully considered until we get verification of underwritten approval.

J.R. Thrasher
http://www.SanDiegoRealEstateVeterans.com
619-929-0105
0 votes Thank Flag Link Sat Aug 31, 2013
Pre-approval is what most sellers and sellers' agent would ask you for. Yes, each lender would run your credit for that purpose. On the contrary, a mortgage broker would be able to match you with multiple lenders without running your credit report multiple times. However, you need to choose a reputable mortgage broker who has access to the lenders of your choice.
0 votes Thank Flag Link Sat Aug 31, 2013
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