This indeed can be a convoluted subject. When I meet with a client, it is my goal to deliver the most beneficial financing package to enhance the clients' financial goals. With that being said, I default to a Pre-Approval for my clients which involves an application, a credit report, review of financial and income documentation, and submission to Desktop Underwriter (Fannie Mae's Automated Underwriting System) to get immediate results which allows me to issue a Pre-Approval on the spot. A Pre-Approval can be completed in less than an hour but does require some effort from the client to gather the needed financial documentation. Standard documentation for Pre-Approval will include: copies of the last 2 years federal tax returns, copies of last 2 years W2's, copies of the last 2 paystubs, copies of the last 2 months of bank statements and/or other assets for down payment and copies of mortgage statements if other real estate is owned. In some instances, there may be issues that need to be addressed and I may want to submit the file to underwriting with a TBD address which can take 24-48 hours for results. A Pre-Approval has a shelf-life of 90 days as credit reports and income/asset documentation will need to be updated. If the Pre-Approval is thorough enough, all that is needed for underwriting will be an executed contract, title report, and appraisal. That being said, additional verifications and forms may be needed as requested by underwriting.
A Pre-Qualification can be issued from a simple conversation with a client and gathering information regarding income and estimated credit score to give the client and Real Estate Agent an idea of an estimated approvable purchase price and payment. The Pre-Qualification does not carry as much validity as a Pre-Approval and typically written offers will need to have a Pre-Approval before acceptance of the offer by the seller.
I know it is an emotional and exciting time for a buyer and they want to rush through the process. It is imperative that the borrower responds quickly and accurately to any requests from the lender. Time is of the essence during a real estate transaction and in this day and age of lending, everything has to be thorough and perfect from the beginning to have a quick and successful close.
Sr. Loan Consultant
Provident Bank Mortgage
9245 Laguna Springs Dr. Ste 130
Elk Grove, CA. 95758
(916) 896-1402 ext 14201
E-Fax (855) 240-1104
Cell (916) 947-4587