Home buying thread

Noodleface_sl said:

Sorry another question, pre-approval vs. pre-qualified. Our bank that we were going to use has you fill out an online application with your basic info to get "pre-qualified". I think it's safe to assume though that we actually want pre-approval. Can anyone confirm that we'd want to go with pre-approval instead? My thoughts are that with pre-approval you're basically giving the bank all of the important documentation and getting the loan process to a point where you are allowed to spend a certain amount and if you find a house you are able to finalize it. With pre-qualified is it sort of like the bank saying "we think you can get this much based on the information you provided, but we need to dig further". Is this correct?

When I get a house I'll invite all my rerolled bros over.

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Pre-Qualification - Can vary but at it's core it's simply a loan officer like me issuing a system generated letter saying you are pre-qualified because I have DU or LP approval based on either what you told me or the documents you gave me. Some lenders may not even require that. Basically a pre-qual just gives you an idea that you might be able to get the loan and doesn't guarentee anything.

Pre-Approval - Is an actual approval from an actual credit decisioning authority ie. the underwriter. You have to put in a full loan application and complete any associated disclosures, you are correct in that you are essentially getting everything ready for when you find a property.

The issue you may have is your realtor may ask for a pre-approval but actually need a pre-qual, pre-quals you can change the numbers quickly to suit your offer. Pre-approval cannot be changed by anyone but the underwriter so this doesn't happen that quickly if at all, you also may qualify for more than your offer and you don't want the seller to know that. Lenders used to call their pre-qual a pre-approval, and some may do, which is now illegal as it's misleading. A lot of lenders won't do pre-approvals due to Operations compacity, Wells Fargo for instance does not have this available at this time at least in the SoCal market. We then get realtors insisting on having the letter state pre-approval even though this isn't possible. It's pretty fucking annoying.

Every market is different so I can always be wrong but right now the big banks are just buying business and brokers rates are way worse. I would only recommend you go to a broker if you have a unique situation where you need a niche product. Otherwise you'll find it more expensive for a worse rate I would expect.

OneofOne_sl said:

Another reason to at least TALK to a broker. My broker wrote up a new pre-approval for every offer we submitted (and he said the exact thing you did - sellers have no need to know our borrowing limit). I didn't even have to do shit - my realtor and broker took care of that. I guess I didn't realize what a pita it is behind the scenes, because of what a non-issue it was for us.

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Right, your broker isn't a credit decision maker so he was basically giving the realtor a piece of paper that was just good for wiping his ass with it. Sometimes this business is retarded.

You can do both, it shouldn't be an issue for the lender in question.