The following is an edited excerpt from Phil Mitsch’s Book “How To Have A Successful Lending Attitude.” This Book is the first of 4 that comprises his Mortgage Loan Officer Solutions Program and it is currently available.
My Philosophy Toward A Mortgage Pre-qualification Versus A Mortgage Pre-approval Is As Follows:
Traditionally home buyers, home sellers, real estate licensees, mortgage licensees, attorneys, financial advisors, and other miscellaneous servicing company personnel who assist in the performance of the entire home buying, home selling, and lending processes have been and still are confused between the terms Mortgage Pre-qualification versus Mortgage Pre-approval. It is absolutely critical for all of these categories of people to thoroughly understand: 1) the difference between real estate buyers getting pre-qualified for a mortgage versus getting pre-approved for one, and 2) the benefits of getting real estate buyers pre-approved. Accomplishing these things can prevent a lot of anger, anxiety, emotionalism, frustration, arbitrations, mediations, threats of lawsuits, and actual lawsuits from occurring.
Definition Of A Home Buyer Mortgage Pre-qualification
When a home buyer gets Pre-qualified by a mortgage loan officer, prior to purchasing a home, it means that the buyer has only verbally represented information to the mortgage loan officer pertaining to their income, expenses, and available cash and liquid assets. Based upon these verbal representations a mortgage loan officer calculates a mortgage amount or amounts that home buyers will potentially be qualified for. No mortgage processing, of any kind, is done to verify in writing any of the home buyer’s verbal representations. Simply stated a Pre-qualification is not a Pre-approval because it is not a Mortgage Commitment.
Definition Of A Home Buyer Mortgage Pre-approval
When a home buyer gets Pre-approved by a mortgage loan officer, prior to purchasing a home, it means that the buyer has actually filled out a mortgage application and had it processed to confirm the information on it and their verbal representations, made to a mortgage loan officer during a Pre-qualification session. As a result of completing mortgage processing the home buyer’s information, pertaining to their income, expenses, and available cash and liquid assets, are verified in writing. Based upon these written verifications a Mortgage Commitment showing an approved mortgage amount or amounts along with any other miscellaneous terms and conditions can be issued to the home buyers in writing. Simply stated a Pre-approval is a Mortgage Commitment.
Major 8 Benefits To Getting Home Buyers Pre-approved For A Mortgage
There are many Benefits to getting home buyers a Mortgage Pre-approval versus a Mortgage Pre-qualification prior to purchasing real estate. The major 8 Benefits are as follows:
Benefit #1: Home sellers prefer selling their properties to pre-approved home buyers
Benefit #2: Real estate listing agents prefer having their listings sold to pre-approved home buyers
Benefit #3: Real estate selling agents prefer working with pre-approved home buyers
Benefit #4: Home buyers, who are pre-approved, are in a stronger position to negotiate with home sellers because
they are perceived as “cash buyers”
Benefit #5: Mortgage processing must be done anyway so why not do it prior to purchasing a home instead of the
traditional way of after purchasing one
Benefit #6: Getting home buyers pre-approved can potentially eliminate embarrassing situations from occurring for
Benefit #7: Getting home buyers pre-approved dramatically increases the odds of a real estate transaction staying
Benefit #8: Getting home buyers pre-approved dramatically decreases the odds of home buyers and home sellers
suing real estate licensees, mortgage licensees, attorneys, and other miscellaneous servicing
company personnel who are involved in the entire home buying, home selling, and lending
processes for malpractice.
Types Of Information That Should Be On Mortgage Pre-qualification And Mortgage Pre-approval Certifications
As a practicing residential Realtor and selling agent I always required my mortgage loan officers to provide numerous types of information on both my Mortgage Pre-qualification and Mortgage Pre-approval Certifications. Doing so dramatically increased: 1) my home buyer’s purchasing power, 2) my odds of selling homes to my home buyers, and 3) my ability to provide my home buyers with a much higher level of consumer service, disclosure, and protection. The 26 Types of information I am referring to are as follows:
Special Note #1:
The 26 Types of information that I required my mortgage loan officers to provide on my Mortgage Pre-qualification and Mortgage Pre-approval Certfications can be found in my How To Have A Successful Lending Attitude Book. This Book is the first of 4 that comprise my 4 Procedure Mortgage Loan Officer Solutions Program and it is currently available.
Special Note #2:
Copies of my 2 sided Mortgage Pre-qualification Certificates and Mortgage Pre-approval Certificates that I designed and used during my 24 years of production as a practicing residential Realtor in southern New Jersey can be found in my Home Buying And Home Selling Forms That Will Guarantee U. S. Real Estate Market Recovery Book. This Book is the fifth of 5 that comprise my 5 Procedure Economic Crisis Solutions Program.