A preapproval is the next step after becoming prequalifed. Essentially, this means that you are supplying all of the documentation that is required to support your loan scenario. Everything you have told the Loan Originator needs to be backed up for a “full doc” loan. The mortgage originator will review your supporting documentation (W2s, paystubs, asset accounts, credit report—tax returns if you’re self employed or paid commission…etc.) and make sure that they have a strong file for the underwriter. Once you have selected your mortgage program, your information is typically submitted to an AUS (automated underwriting system aka a computer) which produces “findings”. The findings detail what type of documentation is required for the loan approval. Sometimes the findings will require less or more documentation than a mortgage originator has obtained. Different lenders may have their own underwriting overlays in addition to what the AUS has provided.
Are you really preapproved or just prequalified for a mortgage? Part 2
February 23, 2012 by 1 Comment
Are you really preapproved or just prequalified for a mortgage? Part 1
February 21, 2012 by 3 Comments
There’s quite a difference between being prequalifed for a mortgage and preapproved. The letters that Loan Originators provide when requested for a prequal or preapproval may appear very similar. In fact, I’ve talked to borrowers on the phone who thought they were actually preapproved, when all they really had was a rate quote worksheet or possible a good faith estimate from a lender. A good faith estimate, loan estiamte or rate quote worksheet are not a commitment to lend and do not indicate that someone has been prequalified.
