This is a critical question because so many loan officers are NOT keeping up with the changing mortgage environment, but still issuing bland letters that indicate a borrower simply needs to come to closing. The pre-approval process is much more thorough than pre-qual.
For pre-qual, the loan officer asks some basic question and probably looks at a credit report before issuing his letter. In essence, it is an opinion letter but has little value.
Pre-approval, on the other hand, requires a full review of documented income, assets, credit history, debt-to-income, loan-to-value and lender guidelines. In most cases, automated underwriting has taken place and your loan officer knows what conditions Fannie Mae or Freddie Mac agencies want to be included in a loan file. In many cases, the borrowers’ docs and the automated agency findings have already been approved by a lender’s underwriter. The file may even be approved subject to title search and appraisal.
First Ohio Home Finance standard practice is to issue full pre-approvals for its clients. This positions you in the best possible negotiating position, much like a cash buyer.
