Pre-approval Letters – Short Version Summer 2022

Hello, I wanted to do a video about pre-approval letters. It’s a really critical topic. I have done a longer one that’s done in great detail, you can see that one below. If you want to take the time you should. It’s a really important topic.

There’s a very formal and lengthy process

But here’s the highlight. The most important fact about pre-approval letters is that many of them are not pre-approval letters. They’re really pre-qualification letters. Loan officers will do a quick analysis, pull a credit report, maybe even get some documents. But unless the file is submitted formally into the loan processing and underwriting workflow and an underwriter reviews it and pre-approves it, it’s not a pre-approval.

Loan officers don’t have underwriting authority.

If we look at something, we can give you our opinion. But that’s a pre-qualification letter. You want to be sure that you’re looking at a pre-approval letter. Whether you’re a listing agent or you’re a buyer agent representing a buyer. If you don’t want the buyer to get in trouble and if you don’t want to take an offer as a listing agent, not knowing if it’s really a stable borrower. Ask one question. Was this file fully processed through your loan processor and underwritten by a human underwriter? If the answer is yes, then you’re looking at a real pre-approval letter. If they start to talk about, well, we took a really hard look at it.

Who’s we? I ran it through the automated underwriting system. The automated underwriting software doesn’t approve loans, the human underwriter does. Ask if a human underwriter has pre-approved the loan. That’s the central question to ask when you’re vetting your pre-approval letters. I hope that helps. And watch the more thorough video, if you’ve got the time. It’s really excellent. There’s a lot more detail on that one. Thanks.

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