“Pre-Qualification” vs. “Pre-Approval;” No Mas “Big Banks”

A Realtor sent us a pre-qualification letter yesterday from another lender for one of our borrowers. The letter was shockingly vague and non-committal. It was written that way b/c the lender had not actually gone through the borrower’s complete file.

We have gone through the borrower’s file with a fine-tooth comb. The other lender was over-stating the borrower’s purchasing power by at least $75,000; the other lender had not done a full income and debt analysis.

We beat this dead horse often, but lenders must do a complete file analysis and a complete “pre-approval” before issuing a pre-approval letter. If they do not, buyers can waste everybody’s time by bidding on houses they cannot actually afford.

JVM always does thorough pre-approvals to avoid having files blow up, and to ensure we can close in 14 days.

Many Listing Agents are leery of accepting any offer with a pre-qual letter from a large bank b/c they know the banks often only do “cursory” pre-approvals; big bank transactions often blow up or get severely delayed b/c of unforeseen financing issues.