Here at the beginning of the 2021 spring market in real estate it’s a good opportunity to revisit what a bona fide pre approval looks like. I say this because I have observed a general reduction in the quality of the pre approvals available in the market the last few months..
I think this is because the mortgage business has been busy with refinance opportunities and this has caused the purchase business to not get the attention it deserves.
There are a LOT of new Mortgage Loan Originators (MLOs) in the business. The economic disruption of the COVID-19 pandemic has brought many folks to the industry, and the addition of their talents is a good thing. However, they are undertrained for purchase borrowers generally, don’t have the experience to understand the stakes in each transaction and are too reliant on technology to do the bare minimum, quickly, for borrowers who are often too impatient. Longtime MLOs are swamped, burned out after a year on the grind and are too often cutting corners. Finally, borrowers are more interested in speed and are buying the BS marketing hype that you can get a legitimate pre approval in 7 minutes on your smartphone.
A bona fide pre approval should really put everyone’s mind at ease in the transaction. The borrowers, agents and SELLERS all have a stake in the outcome. When all relevant documents are gathered by the MLO and reviewed in full, you have a sense of the clients actual financial situation and how the path to approval should flow. Quick & dirty credit report pulls, with a quick interview aren’t enough. When done right, the only things that should stop a pre approved borrower from closing are issues with the property appraising (agreement to overpay) or issues with the title to the property. By requiring complete borrower supporting data and asking an underwriter to review any specific issues, you may have a longer pre approval process, but the tradeoff is a smoother path to the closing table for everyone involved.
The bottom line is that a local, experienced Mortgage Loan Originator is your best bet for a pre approval. Real Estate Professionals know this, and borrowers should look to them for guidance in finding someone competent, professional and accountable to deliver their loan and more importantly the keys to their new home to closing.
