Forget About Pre-Approvals

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It's widely believed that getting a pre-approval (also known as getting pre-qualified) is a way to speed up the process of getting a loan. However, this isn't necessarily true.The ProblemAny lender can pre-approve a client and even give them a letter saying so. But this can create a false sense of security for the home buyer and seller--if the buyer's information has not been verified by the lender, then the letter basically means nothing.In fact, some more unscrupulous lenders can be so anxious to get the deal that they'll just stamp out a standardized pre-approval letter, thinking that the client should qualify for something.Even if a buyer has a pre-approval letter, their financing could still fall through. For many real estate agents, this is a number one complaint. Since this tends to happen too often, they feel they can't take pre-approval letters at face-value any more.Buyers, too, aren't always honest or accurate 100% of the time. It's not unusual for a buyer to inflate their credit, income, asset, and debt information to a lender.The SolutionWhen talking to a lender, ask them what kind of information they'll need for the pre-approval letter. The lender should ask for your pay stubs, your most recent bank statements and your tax returns. If the lender does not ask for any of this, then it should raise a red flag.A lender may charge a fee or take a good-faith deposit to prepare a pre-approval letter. And though you may not want to pay it, it's a sign that the document will have some substance behind it; that your information has been verified.However, the best way to be sure that you'll have the financing to buy the home you really want is to skip the pre-approval process. Move right on to getting an actual approval. You'll know exactly how much you can spend on a house and you won't waste time looking at houses outside of your price range. And when you go to make an offer on a house, the seller will know that your offer is serious and that the deal won't fall through for lack of financing.Getting a pre-approval letter doesn't always mean your information has been verified and the loan you may qualify for hasn't been underwritten. It's possible you might not actually get the loan you need. It's better to get a real approval--the deal between you and the seller will be more solid, and should go faster and smoother.  Mortgage News Home Current Headlines Next Article  Refinancing | Home Loans | Home Equity Loans | My Quicken Loans Login Mortgage News | Mortgage Rates | Mortgage Calculators | Apply Online Careers | Contact Us | Feedback | Site Map | Help | Search Security and Privacy | Disclosures and Licenses | Terms of Use © 2000 - 2005 Quicken Loans Inc., All rights reserved. Lending services provided by Quicken Loans Inc., a subsidiary of Rock Holdings Inc. “Quicken Loans” is a registered service mark of Intuit Inc., used under license. Build 2760 2005-10-28 17:25:13

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