How much quicker can you make acquiring your new home if you get pre-approved for a mortgage?
The biggest reason people fall out of escrow is that their loan qualification wasn’t fully vetted. They did a pre-qualification versus a pre-approval. They either didn’t talk to a lender at all or just did a pre-qualification online or over the phone with no backup documentation.
Pre-Qualification vs Pre-Approval
For example, a home buyer might think they make $5000 per month, but in actuality, they make $3500 base and the rest is overtime. If the overtime hasn’t been solid for 2 years, then it can’t be counted.
If they did an online fill-in-the-blanks application, then this home buyer will get a rude awakening when a set of trained eyeballs called an underwriter looks at his documents and says “hey you qualify for $100k less because this OT can’t be counted”.
So, if you take the time to get pre-approved, then you have provided all the documents necessary, an underwriter has looked them all over, asked for clarification from you in the form of letters or more documents and this means you are fully vetted (underwritten) subject only to the property appraisal, title, surveys, etc.
That shaves off 2 weeks of wait time (not including the time it takes you to hunt down the financial documents needed for the approval).
A pre-approval is good for 3 months, so you have not wasted your time. You’ve definitely gained time.
Be careful though, the big banks call “pre-qualifications” pre-approval interchangeably. If you dare go to go to a big bank, tell them you want to be fully underwritten, approved.
For us, if we have you pre-approved, then we can close the loan in 2 weeks – that gives you a HUGE competitive advantage. And actually, we don’t do prequalifications at all. Nothing in writing unless we have seen the financials and credit.
True Pre-approval is a time saver and therefore a money maker!
About Athena Paquette
If you have questions about getting prequalified or preapproved, be sure to contact Athena Paquette directly. As a mortgage broker, Athena has consulted many clients over the years with mortgage and home advice.