Potential homebuyers are unlikely to be aware of these nuances, and that's fine, but loan officers could use a few strategies to help them walk their clients through the pre-approval process.
One specific area where the changes are being felt is in the pre-approval process. Previously, at the start of the homebuying process, it was customary to obtain a pre-qualification, which essentially meant that a buyer “could” qualify if they found a home, but it wasn’t a guarantee. These new regulations are making sellers leery of pre-qualifications and are causing them to demand pre-approvals, an actual credit approval decision, instead.
Pre-approval actually has a positive outcome for some buyers. With the speed at which homes are now moving, buyers with a pre-approval attached to their bid are more likely to be considered than those without one. The pre-approved buyer is the next best option to an “all cash” buyer who requires no financing at all. So what all goes into the pre-approval process?
Read more: The Dodd-Frank mortgage shift: From pre-qualify to pre-approval | REwired
