With Salin’s Pre-qual, You’ll Be Shouting “No Surprise”!

August 04, 2016 • Author: Sally, Salin Bank blog team

Sally:  Borrowers talk about getting “pre-qualified” or “pre-approved” for a mortgage.  Are those two essentially the same?
Lynne: No, the two terms were definitely not designed to mean the same thing.  What I find, and what I share with both consumers and Realtors™, though, is that different institutions tend to use the terms “pre-qualification” and “pre-approval” in different ways. The main idea, of course, is that both pre-qualification and preapproval letters are ways to certify that a buyer can reasonably expect to qualify to borrow a particular amount of money towards the purchase of a home.
Sally: So, is there any real difference between the terms?
Lynne: With many lenders, the pre-qualification process is based solely on information the consumer provides, information which has not yet been checked or researched. The prospective buyers have not yet submitted their
  • W-2s
  • pay stubs
  • bank statements
  • self-employed personal and business tax forms
  • photo ID
With those lenders, the term “pre-approval letter” might denote that the buyers have submitted documents for verification and that at least one credit bureau report has been checked.
Sally: So, how do you like to proceed with home buyers?
Lynn:  At Salin, we encourage all would-be borrowers not only to submit  complete paperwork, but to authorize us to pull their tri-level (using all three credit bureaus) credit reports. With that information, we can pre-qualify them, going so far as estimating the taxes, insurance, and homeowner dues they’re likely to be paying for homes within their price range.

Sally: Pre-qualification sounds pretty comprehensive to me.
Lynne:  It is, but remember that even when a lender issues a letter to a potential borrower, that letter is still missing one crucial piece of information - the actual address of the home-to-be.
Sally:  I think I see the point - the buyers may be shopping around, looking at different houses and maybe negotiating the price, so they need a letter that demonstrates they’re ready to buy without limiting themselves to any one home or to any exact purchase price.

Lynne:  Very true. Remember, the most important thing here is not the legal definition of the letter we issue, but the fact that when clients choose to provide all their documentation at the beginning of the process,  authorizing us to pull all the credit reports, Salin is able to do a thorough pre-qualification. That way, our borrowers are unlikely to face any surprises once they’ve located the home of their choice and negotiated the price they’re going to pay for it.

Sally:  Nobody wants to hear the word “Surprise!” when they’re closing on the purchase of a home, I’m sure. Going through Salin’s pre-qualification process sounds like the smart way to go!