Our new monthly series will feature Champions School of Real Estate instructors from any of the four career paths we offer, whether it be Real Estate, Appraisal, Home Inspection or Loan Origination. This month’s post was contributed to us by our very own Dallas-based loan instructor Brad Boswell of Supreme Lending (NMLS #655572) Enjoy!
Pre-qualification and pre-approval are often misunderstood, if not by Realtors and originators, then by buyers. They are certainly not equivalent, and getting the right one can mean the difference between a passed-over offer or failed deal, and a signed contract with an easy closing. In today’s highly competitive and lightening-fast real estate market both you and your buyers need the best strategy when it comes to financing.
“The Olden Days” versus Today
Long ago, “pre-qualification” was just done by the Realtor, to make sure a buyer was able to afford a home before spending time shopping. Around the 90’s, the industry transitioned to a few easy, non-standardized calculations made by a frequently unqualified bank sales person. Later, with the glut of easy-to-obtain loan products in the market, little confirmation or proof was required for “pre-qualification.” Finally, after the collapse of 2008, extreme scrutiny became the rule, with double and triple checking of income, debt, credit, and assets, and it continues to increase. With today’s new level of verification and detail, the approval process needs to be thorough, complete, done with a highly qualified mortgage originator, and done early. This helps ensure that your offers are well received, and that deals don’t unravel right before closing. A licensed loan officer with the appropriate training and degree, and extensive experience with the nuances of today’s rules and regulations, can make all the difference for you and your buyer.
The Issues with Pre-qualification
Pre-qualification is an estimate; a lender saying they’d like to work with your buyer based on a credit report and verbal information. It’s not ironclad, and has not been processed or reviewed by underwriting. Some issues are:
- No supporting documentation
- Many details still unknown
- Done by originators, not underwriters
- Possible underwriting conditions or lagging issues not addressed
Pre-approval before showings is the ideal scenario. An established rapport with your lending partner helps you send buyers to them knowing they’ll be well cared for, and your confidence will help buyers feel safe entering into the full approval process early on. Your buyer will be able to fall in love with a home knowing they can afford it and are qualified to purchase it. Down payment, income, and assets will already be documented, thoroughly examined, and approved. Your offer, usually among many in today’s market, will stand out. You will be poised to move quickly, with less stress and waiting, while minimizing unforeseen obstacles and delays—a fully preapproved loan can close in two weeks once you have a contract. Happy, confidant buyers, winning offers, and a streamlined loan process will help make the deal a success!
Our Champions School of Real Estate instructors are all experts in their fields. Learn a little more about Brad Boswell in his own words below:
|About Brad BoswellSuperior service is Brad’s passion and he will always provide it, from his initial meeting all the way through final funding of each loan, keeping everyone informed and happy throughout the process. His focus is on meeting each customer’s unique needs—using the latest technology to search hundreds of loan programs to find the best match, ensuring on-time, drama free closings, and answering all questions throughout the process. With a degree in Mortgage Banking, Texas Monthly and DMagazine customer service awards, top 1% in national closed loan volume, and in the mortgage business since 1995 working with all loan types and sizes, he truly cares about customers…every step of the way. Referrals are his only source of business, so he hopes to earn everyone’s trust so that they will pass his name along to their friends and family.