Is a quote the same thing as a preapproval? (loan officer, interest rate, real estate)
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I'm going to be buying my first home later this year and I'm compiling a list of lenders to check out that are offering the product I want and based on their advertised rates. However, I understand that I will not actually know my rate until they run my credit and take all of my info and decide specifically what rate they are willing to offer to me.
Since it's good to comparison shop, I will likely be contacting 4 or 5 lenders to obtain a real individualized quote. My question is, is that the same thing as a preapproval? If I obtain 4 or 5 quotes does that mean I am preapproved at all 5 lenders? Or is just getting a personal "real" quote a step below getting an actual preappoval?
All of the houses I am looking at are generally in the same price range and I am really looking for the same product regardless of lender, so I can describe what I am looking for fairly uniformly I think.
You can interview three or four lenders. Once you find one you think is the best fit for you, then get the pre-qualification done. Talk to several Realtors in your market. They will have lists of lenders who provide competitive rates, excellent customer experience, and who don't fail two days before closing.
It's this last point that you won't find out by just interviewing lenders. A Realtor will know. And you don't want to lose your dream home because a lender fell down on the job or because their underwriting department is always backed up.
I would recommend you also include one credit union in the list. Ask a Realtor who the best credit union is in your market.
Note that a pre-qualification is not the same as pre-approval. The first is basic, the second one is a very deep dive.
You can interview three or four lenders. Once you find one you think is the best fit for you, then get the pre-qualification done. Talk to several Realtors in your market. They will have lists of lenders who provide competitive rates, excellent customer experience, and who don't fail two days before closing.
It's this last point that you won't find out by just interviewing lenders. A Realtor will know. And you don't want to lose your dream home because a lender fell down on the job or because their underwriting department is always backed up.
I would recommend you also include one credit union in the list. Ask a Realtor who the best credit union is in your market.
Note that a pre-qualification is not the same as pre-approval. The first is basic, the second one is a very deep dive.
Good luck and happy home hunting!
Thanks but this does not answer my question. I know what a preapproval vs prequal is. You mention interviewing lenders and then getting a prequal. Are you able to get an individual "real" quote during either of those phases or do you not actually know the rate until you obtain a preapproval? And if the latter, does that mean that a quote and a preapproval is effectively the same?
Have one lender pull your credit and give you a quote. Use that pull on your credit to get the score and shop with the rest.
Here is what I recommend: Start lender #1. Tell them you are interested in being pre-qualified BEFORE you fill out an application. If they say they need you to go to website to complete a loan app, they weren't listening. (Clue #1 not a good match). They should have the ability to pull your credit without an application and they should be able to tell you what you are qualified for and the quote. (Also, very important they review your debt in detail to make sure it is correct).
During this conversation, pay attention. Hopefully, you are imminently qualified for more than you wish to borrow. If that is the case, your rate shopping can concentrate on how to ferret out the lender to work best with you, even if you are qualified to buy more than you want, did they give you a range in loan amounts? Did they explain as rates change, your max loan changes because your payment changes......I know, this is Captain Obvious material, but you are a FTHB (first time home buyer). Did they give you the equivalent of patting you on the head and tell you not to worry your pretty face about it? (Clue #2 to run) Did they return your call in a reasonable time? First contact is frequently the quickest someone will respond. If not, #3. Did they put you on hold to take another call? #4 (Not to be confused with answering your call and asking if they can call you right back or do you mind holding a second before they lose their train of thought). Ask them is they have the ability to get an underwriter's (not a DU or computer approval, a live underwriter) pre-approval prior to finding a property. (If not, #5) Tell them you are just starting your FTHB journey and will get back to them. And, just before you hang up, ask them if they price match. Yep, if not, #6.
Here is the problem with calling 4 lenders and picking the lowest to apply with before looking: They know you can't lock in, there's no way to know if you're getting the real deal......so the process I am sharing with you is how to pick someone that actually cares. The lowest rate means jack if they don't hear you or they can't get you to closing on time and certainly if they are deceitful regarding rates. Also, most lenders are in a fairly close range of each other - some are out of the market, but not lately. Personally, I have never seen it this competitive.
So, if you decide to follow my advice, wash, rinse repeat the prequalification exercise you did with lender #1. You choose how many, it's your time. Many don't have the time to call more than 3 or 4, tops. After you have called who you plan to call, look at your notes and who rose to the top? That's where you start and actually apply for the pre-approval (and confirm your score, once again) Get your paperwork in. Hopefully, you were evaluated for any FTHB programs. You can start shopping (look at homes) with your agent as a pre-qualified buyer or you can wait until you're a pre-approval buyer. (The latter is a stronger letter and could edge out the competition interested in the same property, but you can shop and work on the pre-approval at the same time. If there is something in question, one of the lender's would have brought it up). Anyway, get that going and go find a house.
When the home is found and you are under contract: call back your 3 or 4 lenders. Do this late morning, say 10:30 AM, after they all have their rates for the day. Tell them you think (that's to aid with some of these guys that can get pushy - you can always say it didn't go thru) you may have a contract and if so, you may be able to lock in today. Now you will get true quotes. If one is lower than your lender, ask for a worksheet or ask for the quote in writing. Take that to the lender you applied with and request a price match. If they match or not, you now have a decision to make.
Not everyone has the time to do all this, especially with little notice.....we move at speeds never thought possible just 30 years ago. When we had dirt floors, Realtors would jump in their cars to hand deliver the contract to the seller. If the seller was going to think about it, then their agent had to drive the contract back. Every initial (or change) required driving........until the slick papered fax came along. There were no lock boxes - keys were hung up in real estate office's for showings....loans were just as slow. So now, it moves so fast, but the buyer hardly has time to digest a thing. And when the buyer is a FTHB, more care needs to be exerted by everyone involved.
Yes, but until you are under contract, that quote means absolutely nothing. As tempting as it is, don't fall for the low quote. Your initial post led me to believe you were not aware of how you could be gamed. Call around for different programs, but rate comparison shopping this point in the process is a waste of time
Quote:
However, I understand that I will not actually know my rate until they run my credit and take all of my info and decide specifically what rate they are willing to offer to me.
Quotes and prequalification are not the same thing. And then, there are various levels of pre-approvals. The only person at a bank that can offer a pre-approval is an underwriter. The loan officer may issue you a pre-approval letter, but there will be loopholes. Any approval an underwriter has seen, will contain the word commitment.
There are at least 100 threads here where buyers chased the best rate, only to be left at the alter. Don't be that guy....everyone here will do what they can to convince buyers, like you, not to chose the shiny toy.
When I post on CD, I assume the greenest of green buyers are reading here, so please do not misunderstand my level of detail as though you just crawled out of a rock. There are many other readers searching the answers to your very questions and more.
I understand what you are saying, but since I'm only going to be applying to established lenders that have a substantial number of good reviews I think that will protect me somewhat from deceitful companies that will fail to back up their low rate with execution. But yes I will keep in mind that only the contract rate is the final one. I have good income, an 800 fico, etc. so I'm not too worried about running into difficulties with obscure lender requirements later in the process, at least if the other people's experiences are honest.
I understand what you are saying, but since I'm only going to be applying to established lenders that have a substantial number of good reviews I think that will protect me somewhat from deceitful companies that will fail to back up their low rate with execution. But yes I will keep in mind that only the contract rate is the final one. I have good income, an 800 fico, etc. so I'm not too worried about running into difficulties with obscure lender requirements later in the process, at least if the other people's experiences are honest.
Your 800 fico doesn't protect you from a lazy lender or from "obscure" requirements being added at the end of the loan process. If anything, a high fico means you'll do your part to close even if you get abused by your lender. Don't be afraid to push back & don't assume your good faith will inspire lenders to act properly with you. I had much better luck in dealing with a *small* local credit union than I did with large "established " lenders on mortgages- the big guys can send your phone calls to a call center in India, the small lenders might actually have to face you in person if they Bork your deal.
I honestly think a high fico & having money in the bank makes some lenders think they can get away with things - jacking an interest rate, tacking on excessive fees, they *know* you can afford to pay more & you'll honor whatever contract you'll sign, so they get stupid.
I honestly think a high fico & having money in the bank makes some lenders think they can get away with things - jacking an interest rate, tacking on excessive fees, they *know* you can afford to pay more & you'll honor whatever contract you'll sign, so they get stupid.
Well again, this is why I am so focused on assessing fees and rates up front and comparing lenders based on others' experiences. I know I am entitled to the best rates and I am going to make sure I get them.
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