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There is nothing better than being able to say YES! The best days are the days when I get to tell people yes.YES, your mortgage is approved. But sometimes in mortgage lending the "YES" is problematical. Sometimes the YES is based on enough information to believe the answer will be YES but there is something else floating around out there that I don't know about-a something that can turn a YES into a cold hard NO!
Most sellers upon receiving an offer have a reasonable expectation that the potential buyer has the means to actually close the deal and cough up the money to buy the house. To those ends the buyer's agent presents the seller's agent with what is customarily known as a letter of pre-approval. This letter is written on the letter head of the lender with whom the buyer wishes to obtain financing. It typically outlines that the lender has at least spoken to the buyer, taken a look at credit and given that broad overview, thinks that the buyer will be able to obtain financing. Hopefully they have reviewed some pay stubs and W2's.
I can't even begin to enumerate all the things that can go wrong with only the information upon which a pre-approval is based. The key part of the phrase pre-approval is the "pre". What the "pre" means is that the loan is not approved-an underwriter hasn't even peeked at it in most cases. Any questions that will be generated once an underwriter gets their grubby hands on the loan package are as yet, unanswered. Depending on how diligent the loan originator was in following the questions that sprout from the basic questions he/she has asked-any result can occur-including "LOAN DENIED". By the time we get to "LOAN DENIED" money has been spent, a home has been taken off the market and time has been wasted. Not a pretty picture.
Loan originators aren't underwriters. Over time we learn a lot and may have a good idea of what can be approved and what can't. But more than once I have had a loan that I thought couldn't be done be approved and ones that I thought would be no problem denied. So we aren't the last word in approval predictions. The rules on mortgage loans have changed so many times that knowing them all on any given day is a Herculean task. That is why we have underwriters. People who specialize in particular loan products. Most companies are set up so the underwriter's task is specific-one underwriter may underwrite conventional loans, VA loans, FHA loans or USDA loans and they stick to that product. (Many are cross trained-but normally you don't see a conventional underwriter adding an FHA loan to their to do list.
What every loan originator wants and every lender wants is this:
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If we don't get to "LOAN APPROVED" a lot of time energy and money has been wasted and quite frankly. I look like a putz.
And since I don't like looking like a putz, I tend to prefer the "APPROVED" days- I have a solution. (You knew I would didn't you?)
My solution is a PRE-PURCHASE UNDERWRITTEN APPROVAL. And yes, my company is one of the few that offers those. What this means is that you come in, we take your application without a house -you don't have a house yet, but we have all the pertinent information to submit a loan file and we get you underwritten. Any issues, unanswered questions, deal breakers-all that stuff, if there is any, will come out in the wash. We then have time to solve any problems before the clock is ticking on a closing date. When I turn you loose with an "APPROVED" stamp on your forehead, you are ready to buy. You are ready like a cash buyer is ready.
All that we need is an appraisal and clear title work. It doesn't get
much better than that.
Why doesn't every lender do that? Underwriting takes time, underwriter's expect to be paid, and if the buyer chooses to go somewhere else for their loan then the time has been spent to no benefit for the lender.
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