Are You Really Prequalified to Buy a Home?

Just because a buyer is holding a preapproval letter from a lender, it does not mean that buyer is prequalified to buy a home in Sacramento. Of course, the buyer does not understand that because, after all, the lender issued the letter, what could possibly be wrong with it? I don’t have enough time in the day to talk about how many things could be wrong with that preapproval letter, but I’ll tell you this, no seller wants to find out in underwriting that a particular problem exists that should have been discovered before the darn approval letter was issued in the first place.

If you think these kinds of thing don’t happen, then you don’t work in Sacramento real estate. Faulty preapproval letters are almost becoming the norm. Each one is different, so a seller needs to read the letter to figure out if the lender even has a loan application from the borrower. The lender might not. The lender is not required to obtain a loan application in person prior to issuing a prequal letter.

We are presently working with a very sweet couple who hope to buy their first home soon. Like most first-time home buyers, they are filled with the excitement and a little bit of stress over finding a home. The home buying process is very new to them, and they aren’t sure where to start, but they knew enough to go to their local credit union and a major bank to get a loan pre approval letter before calling me.

Hot off the presses from the credit union, that pre approval letter was their ticket to viewing homes — because it meant they could finally write an offer if they fell in love with a home. The major bank was issuing the preapproval letter as well, although it seemed to be delayed by a few days. It takes only a few hours to get a preapproval letter from our preferred mortgage brokers.

Just to compare rates and service, we suggested the buyers call Dan Tharp at Guild Mortgage. He handled the refinance for my home a long time ago, and I’ve referred Dan Tharp for years. Honest, ethical, hardworking, devoted to the mortgage business and extremely smart. He verified the buyers and guess what? They are not pre-approved. The credit union made a big mistake. The buyers verified this with the credit union as well. They didn’t just take Dan’s word for it, although they could have. Because now Dan is helping them to fix that roadblock, and they will be back on the road to home ownership in no time at all.

Just because you are holding a pre-approval letter, it does not mean you are actually pre-approved. Not even if it comes from the biggest credit union in California.