Understand what is Pre Qualification or Pre Approval
Different companies may have different definition of these terms. We define as:
Pre Qualification is an initial review of a borrower (or borrowers) credit (usually with a one bureau soft pull report as not affect the borrower’s credit score). We still like to collect borrowers’ income, asset, and liability documents. Pre-Qualification usually is handled by a licensed loan originator. In Texas we use Texas TAC §80.201(a) Form A.
Pre-Approval: This is more accurate and more detail review required to get a Pre-Approval. We require a Tri-Merge credit report (this is the credit report required by almost all underwriters) and all support documents . We will go through an underwriting processing. We will issue Texas TAC §80.201(b) Form B . If a borrower (borrowers) get a Pre-Approval letter in certain days (the closing date must be in 120 days of the the credit report pulling date and borrower credit and financial conditions has no change until loan close/fund date. ) There are no third party financial condition time required on Third Party Financing Addendum (TREC No 40-9) section 2 A.
As multi Hard Pull credit may negatively affect the borrower’s credit score, before a purchase contract is executed, we recommend to use soft pull credit to get a Pre-Qualification. You may just ask the third party financing addendum approval date as 7 or 10 days (usually same as option period). This can help you get a contract in bid situation.
After a purchase contract is executed, contact us and we can get a hard pull credit report , update all support documents we can have the loan approve in 2 to 4 days after we get all info and docs.
Please aware both Pre-Qualification and Pre-Approval do not review the subject property. The loan final approval will subject underwriter reviewing the property information and documents. No worry the financing contingency date expire as property review is not subject to the date on Third Party Financing Addendum section 2A.
