“I called a mortgage broker the other day to get pre-qualified to buy a home. We talked for 10 minutes and 2 minutes later he faxed me a letter saying I was approved for a home up to $600,000. That was so fast I have my doubts that it’s for real. Can he approve me that fast? What do you think?”
Answer:
In the good old days, if you were pre-qualified for a loan, you were good as gold.
Then some lenders started processing and “underwriting” (by a real person or via “desk-top underwriting” computer programs using artificial intelligence) loans for homebuyers before they found a home. And voila: Pre-APPROVAL became the rage.
And since homebuyers and agents want pre-approvals, some lenders now “cheat” and, with no authority to do so, they’ll issue worthless pre-approval letters that are truly just pre-qualifications.
So I sum it up this way:
There are three types of qualification for a home loan:
1. Pre-qualification
2. Bogus pre-approval
3. REAL pre-approval
#1 & #2 are really the same. And it sounds like you got #2, the “bogus pre-approval”, from that lender.
In case you’re interested, I work with a great loan officer. He can actually give you a REAL pre-approval signed by a REAL underwriter in just days or sometimes even hours.
Hidden Traps in the Contract’s Small Print for sellers… guess what Trap #1 is?
