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Alright, so I'm pretty sure I know the difference between getting pre-approved and pre-qualified. That being said, here's the deal...
I'm applying for an FHA mortgage through Dollar Bank, a very good and solid institution here in Pittsburgh. They have great rates and such. My loan officer has been very helpful and quick to respond. I'm awaiting to hear from her later today, but I wanted some clarification from others before I talk to her.
When we started the process, she told me that she wanted to get me a pre-approval since it carried more weight and was more serious. I loved her thinking and sent her copies of paystubs, W-2's, bank statements and the whole nine yards. She also needed some verification of employment and past employers, landlords, etc. So a day or two passed and she called me yesterday. She told me that my credit looked very good (710 score) and everything seemed to be in order. I then asked how long it should take for pre-approval, and she said it should take a week or two b/c it will fall in line before the ones under contract that need to be approved. Does this make sense? It seems kind of odd.
Further, she said she would fax me a "pre-qualification" letter this morning. She made reference to an automated underwriting system that she uses. Would this system be used for a simple pre-qual? Why did I submit so many documents just to get a pre-qual? I hope that she is merely trying to put me in better position to be pre-approved.
So does it normally take this long for a pre-approval? If my info is run through an AUS, does this carry more weight and will I likely be approved? I hope I'm not being too paranoid.
She has everything that she needs to provide you with one. As long as she can document everything that she put into the system, an AUS (Automated Underwriting System) approval means that you are approved.
Each bank works a little differently in how they handle pre-qual's and pre-approval's. In this case it sounds like your bank won't issue a pre-approval letter until your information has been reviewed by an underwriter. Other banks will take your documetation, plug it into the AUS and if it says you are good, they will issue you the pre-approval.
In my case, the LO took all the information, plugged it into the AUS and came back to me in a couple days with the pre-approval letter. I would imagine in this scenario that your pre-approval is only as good as the LO reviewing the file.
In your case, getting the pre-approval only after an underwriter reviews the file would be even more solid as you will have completed a good chunk of the background and verification steps before even putting in an offer.
IMO it simply sounds like your bank is a little more conservative than others and these days that can be a good thing. I wouldn't hesitate to take the pre-qual letter and start shopping or even put in an offer on a house you like.
I think the OP is, like a lot of prospective home owners, a little on edge , paranoid is probably too strong a word.
As long as the data that they got off bank statements and W-2 all matches and no negatives come up the pre-qual will become the pre-approval. The way many lenders work is the pre-approval is coming from a file started by the underwriting department that ultimately will result in the funded loan, so it makes sense they want to quash any problems before they give you the green light. That should mean a very strong pr-approval letter and the seller should be very comfortable that they should not need to worry about the deal not closing due to financing problems.
A little delay now is better than any delay at closing.
Just got off the phone with my LO. She told me that the pre-approval will take about a week, and that since I already submitted all the docs, everything should be fine. For now, though, she will get me a pre-qual letter after it is run through their automated underwriting system. But...
She said that the system was acting up and not accepting credit reports -- and it happened to mine. She said it wasn't "accepting" my credit report for some weird reason. My CR has no issues -- she printed it and had it in front of her. The system simply spit back out my report, basically.
So, my question is -- why is the AUS even necessary for a simple pre-qual? She said she could get me a letter today if push comes to shove. But I'm feeling uneasy about it all.
Everyone is different. The only absolute in this business is a loan commitment, and that can only be issued after evaluation of credit and collateral, and even then, there are conditions.
You're with a solid bank, I am willing to bet any letter your loan officer provides will be accepted, whether prequalified or preapproval. Try to relax, there have been many different updates in everyone's front end originations (computers) systems due to recent changes in lending legislation that we must accommodate. I've had many times where I was running a loan through and some quirk had me banging my head for two days. If you're not under contract, there's really no reason to be uneasy.
Now, if you feel uneasy about the loan officer, change immediately. Completely different issue. How did you find her? Is she a full time loan officer? Is she new to the bank? Is this really a feeling of unease because of what letter they can provide, or is it her?
I think the OP is, like a lot of prospective home owners, a little on edge , paranoid is probably too strong a word.
"Paranoid" is not too strong a word for what I'm feeling. We too are FTHB and we were told our loan would be out of underwriting "early this week." It's Thursday and it is still in underwriting.
On the plus side, my mortgage lady and Realtor are both in touch all the time, reassuring me, etc. The holdup seems to be that I'm in school (but working full-time at a well-paying job) and am using financial aid to help pay for school. Our downpayment is NOT coming from the financial aid moneys, but the underwriter apparently wanted even more documentation than the reams of paper I sent earlier in the process.
So yes. I'm paranoid. I would go so far as to say I'm freaking out. But my loan officer and Realtor both have assured me that it WILL go through; it's just taking a little longer because of the volume of loans, them needing that bit of extra paperwork, etc.
I keep telling myself that my loan officer has done this before. She knows what it takes to get a loan through underwriting. She wouldn't steer me wrong.
Follow up for whomever cares: We got cleared to close Friday morning last week, closed on Monday, loan was funded Monday evening, and we moved on Tuesday. We are now happily in our gorgeous home and completely in love with it!
Buying a house was the least fun thing I've ever done - WAY too much stress for me. We're never moving again.
For my experience, pre-approval means you have to pay them the application processing fee to get your credit checked and start putting in all your information for the underwriter to pre-approve you. Pre-qualification letter is meaning that they have locked your rate in and you are pre-qualified to start shopping.
As of my experience, if you are serious about buying a house and know that you will hit a contract in the next 30-60 days, I recommend to pay the fee and start your application process "WHILE" your shopping, ask them to lock your rate for 90 days, this way your interest rate can't go up within the 90 days, you can always get a new rate locked if you don't find a house, but
If you know you already have the best interest rate for that lender than pay them to start the process, otherwise if you end up having contingencies "deadlines to remove certain conditions" like loan contigency , appraisal contingency or inspection contigency, the loan application process and approval process might be longer and require more time then you think.
For me, I wish I had started my application sooner, this way I should have all the required paperworks in when i got my contract the first week and pre-approved for appraisal, now I have to wait 2-3 weeks for the Loan processor to get to UW and back and forth, while my purchase contract is hanging in the middle of the air with a 14 day loan contingency.
"good luck!"
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