pre approval definition

Posted by Marty Snyder

Pre-Approval Definition vs Pre-Qualified Home Loans

A lot of clients, buyer or seller and some real estate professionals lack understanding about the substantial difference between a pre-approval definition and pre-qualified home loans and unfortunately cost some the dream of buying a home.

There are several reasons both Realtors and sellers want buyers to fit the pre-approval definition as it means the buyer has spoken to a lender and has the financial capacity to follow through on a purchase.

pre approval definition

Savvy Realtors that are going to help list a property also want the seller to get pre-approved if the Realtor is going to help them with a home purchase as well before listing the current property.

Pre-qualified home loans are a positive signal, but not as concrete as the pre-approval definition.

A licensed mortgage lender collects basic information like income, debt, assets provided by the buyer, often online and the home loan amount is only an approximation based on superficial information.

By the pre-approval definition, the mortgage lender actually pulls the credit score, determines the debt to income ratio, vets the buyer through careful examination of tax income documents, proof of income, verified employment and assets.

The loan officer can then offer the buyer the best loan product and lowest rate possible with regard to verified down payment amount funds.

FHA or conventional - which is better?

Avoid the Disappointment of a Collapsed Deal

It’s a truly heartbreaking and maddening thing for all parties involved in a sale and purchase when an offer is submitted, only to find out the buyer needs to correct something on their credit profile, which can take months.

It the time it takes to get credit information corrected, the home the buyer had their heart set on will likely sell to better-prepared buyer. Pre-approval is everything.

It’s also crucial that once an offer is accepted that buyers protect their credit like an uncooked egg carried all day every day in their pocket and must be mindful of how fragile it is. Even a small purchase on a card, a new account or closing an existing one can drop your score enough or change your debt-to-income ratio enough to kill your pre-approval.

As my business partner Marty Snyder and I are active real estate professionals, I can tell you that time is precious. Try spending two months showing properties to someone who isn’t, can’t or blows their pre-approval.

How to get your offer accepted

As professionals, it’s our job to guide buyers and sellers and this topic is of particular importance.

It’s true for home sellers too, if they intend to list with us and also buy another home whether through us or another Realtor, pre-approval speaks volumes. The problem with some sellers is their belief that the fact they own a home means they’ll easily meet the pre-approved definition and neglect monitoring and if needed, correcting the credit picture and debt-to-income requirements.

So, it’s no small wonder real estate agents and Realtors everywhere are reluctant to work with anyone who doesn’t meet the pre-approval definition.

How to buy a home - 10 easy steps

Ohio Realtor

Marty Snyder

Realtor, Webmaster, Social Media 

Cell: 513 292 9374

Marty@SWOhiorealestate.com

3 Responses to "pre approval definition"

Marty Snyder wrote: Hey Greg, thanks for posting this - I run into it all the time with new clients and they ask about Rocket Mortgage, Quicken Loans and though some are truly prepared to buy, some aren't and mistakenly believe that because they got "pre quaified" they are in good shape to buy, a little misleading for the unknowing.

Posted on Thursday, July 21st, 2016 at 1:23pm.

alda wrote: I always wondered about that, how they can give you a quote when they haven't even looked at your credit and always seemed fishy to me! I did have a question though, are there any special programs around the cincinnati area for veterans beyond a VA loan? I looked into it but seems like a lot of other costs even though there's no downpayment.

Posted on Thursday, July 21st, 2016 at 1:30pm.

Greg Hancock wrote: Hello Alda, thanks for comment and for your query and the answer is yes - Ohio Hero's program for starters, this will knock a quarter percent off an eligible buyer and for military men and women, police, firefighters, paramedics, teachers etc. Also, depending on when you choose to purchase, every year shortly before spring there's the Welcome Home First Time Buyer's grant, a form of down payment assistance worth $5,000. Additionally, many cities and counties around SW Ohio offer first time home buyer incentives starting at $2,500 - $15,000 and the highest I've ever seen is $25,000 - again, offers usually start just prior to spring. I'll send you an email with these items, please respond with your time frame to buy and where / what you're looking for, we'll be glad to help, cheers!

Posted on Thursday, July 21st, 2016 at 2:40pm.

Leave a Comment