The 4 Types Of Loan Approval
The difference between a “Pre-Approval” and a “Pre-Qualification”
1. Pre-Qualification WITHOUT Credit Review
– A credit report is not reviewed by a lender; income, assets, or employment documents are not reviewed, only provided by the client verbally or entered on a website.
– Loan officer relies on the client conversation before providing a statement of the loan amount for which the client may qualify.
2. Pre-Qualification WITH Credit Review
– A credit report is pulled and reviewed by a loan officer, but no income, asset, and employment documentation is reviewed. Again, only relying on information provided by the client verbally or entered on a website.
– If the client believes that he/she is pre-approved, the stage is set for problems. Surprises can show up on pay stubs, tax returns and banks statements that can lead to last minute documentation requests, delays in closing, or no closing at all.
3. Pre-Approval WITHOUT Underwriting Review
– A credit report is pulled and reviewed by a loan officer.
– Income, employment and asset documentation is obtained and reviewed by a loan officer.
– Loan officer runs the file through an Automated Underwriting System.
– Most lenders call this a pre-approval, even though a live underwriter has not reviewed any of the documents. A live underwriter is the person who will later issue the final approval, also known as a commitment.
4. Synergy One Lending On-time Closing Guarantee
Change this to mirror S1L’s 14, 17 or 21 Closing Guarantee requirements/guarantees.