Tuesday, February 19, 2013

Mortgage pre-approval or "pretend approval"?

Loan Officer Steve Dunnett lays down the law on mortgage pre-approvals...there's a new sheriff in town!

In the past few weeks I’ve spoken to several customers who told me that their loan guy had pre-approved them for a mortgage without running their credit or obtaining any documents. These people were surprised by the amount of documentation that I had requested in order to issue a pre-approval for them. I was more than surprised that other professionals had provided a pre-approval letter to anyone without documentation.

The amount of documentation that needs to be obtained for a loan these days has increased.  If a loan officer you’ve spoken to is providing you with a pre-approval without first obtaining and reviewing your documents than that person is doing you no favors. In fact, it’s more like they are putting you on a rickety plane with an inexperienced pilot, no seat belt, and no flotation device. You could end up swimming in an ocean with the sharks. 

Seriously, receiving an unqualified pre-approval and then not being able to obtain financing could be devastating to you.  Before issuing a pre-approval your loan officer should at least be reviewing: 

       Credit reports
-      2 years worth of tax returns
       Pay stubs
       Bank statements

Without these items you and your lender will not have an accurate picture of your ability to obtain financing.  If you received a "pretend approval" OR have any questions about getting a mortgage pre-approval please give me a call. I would be happy to be a resource for you.  

Steve Dunnett