BEWARE OF BUYERS WHO ARE NOT PROPERLY APPROVED.

Homesellers need to be wary of prequalified homebuyers who appear as if they're ready, willing, and able to buy a property because unless buyers are properly preapproved by the right institution, problems could arise during the transaction.

Often, the terms “prequalified” and “preapproved” are used interchangeably and this is a gross oversight when it occurs. While there are various interpretations and definitions of either term, experienced real estate professionals want homesellers and homebuyers alike to know that when applying for a mortgage loan, there is a huge difference between pre-qualification and pre-approval!

When a homebuyer has been prequalified, it simply means that a lender has provided an estimate of what the buyer can afford, based upon the information that the lender was given.
Buyer has been interviewed by a reputable mortgage lender and buyer has provided information on income, assets, debts, and down payment. The lender provides an opinion of the buyer’s potential based upon the information provided.

When a homebuyer has been preapproved, a more thorough process has been followed. A pre-approval is a conditional commitment to receive a loan. Buyer has submitted a full loan application to include a credit check, paying an application fee, a completed FNMA Form. Lender has verified income, assets, debts, and down payment The lender provides an approval letter indicating an amount and remaining conditions to be met (such as appraisal, title, etc.)

A pre-approval is far more desirable than a pre-qualification, but it is still no guarantee that the buyer will get a loan. Experience shows that mortgage brokers have a much higher probability of closing on a loan than a bank or a credit union (see post of 1/14/2011). At Homeowners Concept and because of our high volume of sales we have a running list of the best lenders in Metro Milwaukee.