If a buyer is looking to move quickly on a property, do they need to be pre-approved or pre-qualified?

Q:  I’m a realtor in PA with a well known company, and we also have a mortgage company. You keep saying that you need to be pre-approved, not pre-qualified. Our lender says that it cannot be a pre-approval if a client is looking to move quickly on a property because pre-approvals need to go to underwriting, and underwriting is working on all the transactions in the works, which can be a time-consuming process. They of course check credit, get W2, and pay stubs.

A:  It is important to understand that a buyer or seller’s reliance upon a pre-qualification/pre-approval is only as good as the thoroughness of the review provided by the lender. As a result, buyers should start well in advance of making an offer to get a pre-approval.  Some lenders are not equipped with sufficient resources to provide an underwritten pre-approval, particularly in peak borrowing periods we are in today with rates low.

As a buyer, if you are considering signing a non-financing contingent contract, you should either be prepared to truly pay cash or get a lender to do a pre-approval and not a pre-qual. Please let us know if we can assist you in providing your buyers a pre-approval.

Filed Under: Mortgage Financing