Pre-Approval: What Is It?
The question surrounding a pre-approval and what is it it or how to get started with it comes up pretty often.
The mortgage prequalification is simply taking an application and running credit to review and discuss options for a buyer without running an automated engine (automated underwriting systems, such as Fannie Mae’s Desktop Underwriter (DU) or Freddie Mac’s Loan Product Advisor (LP)).
This is a simple process however the pre-approval is really what most agents want to see when helping a buyer look for a home. This includes running the AUS system(s) and reviewing income and asset documentation, confirming the ability of the buyer to purchase the home itself.
Often, when approved to do so, I personally call the listing agent to discuss what I can confirm as reviewed, to strengthen the offer and ability to get that offer accepted. The process to get pre-approved generally is no cost and the pre-approval can last generally for three months, but can be updated with a new credit report and income and asset documentation.
The credit score of course is a piece of this puzzle, as is the income and asset and the greater the credit score, the better the pricing or interest rate a prospective buyer can receive.