When you search “how to get pre-approved for a mortgage” there are countless ways to pre-qualify for a mortgage in 60 seconds. But, getting approved for your mortgage takes a bit more than 60 seconds. If it only took 60 seconds, I wouldn’t be doing what I’m doing!
So, what’s with the contradictory information? Transparency is not a word that would be used to characterize the banking world, unfortunately. But, it’s a word I like so let’s dig into these pre-qualify tools.
Speeding Up the Pre-Qualification Process
Technology is evolving with incredible speed…frankly, it’s hard to keep up! But, all these mortgage pre-qualification tools do is speed up the communication process.
Filling out a mortgage application online or on a mobile app speeds up the initial interaction with the client. However, in the background, the same process still has to happen. And, no matter how fast you press apply or send, there are still many levels of application approvals.
These tools also take time to adapt to every new regulation or rule, which happens more frequently than you think.
This is where you as home buyers, especially new home buyers, need to be careful. The only thing that is quick and easy is getting your contact information and spitting out an extremely vague mortgage amount. And that’s where you need to beware (it sounds really ominous doesn’t it?)
Why You Should Be Cautious of Pre-Qualification Tools
So, this vague mortgage amount is what can get people into trouble. Usually, it’s much higher than what clients will actually be approved for. I’ve seen people even go house hunting thinking that they would be approved for the amount that they were qualified at. But in the end, they were disappointed to find out that they could not afford their dream home.
The word “qualification” is deceiving because it implies a process that will actually qualify you for a mortgage. But, it’s not the case.
If you find an advertisement is claiming that the process takes “60 seconds” or that you can apply “quick and easy”, this is clearly just a qualification.
What is a Mortgage Pre-Approval?
So, what is a mortgage pre-approval?
A mortgage pre-approval is a fully underwritten file, meaning I collect all your documents upfront to verify your income, credit, and employment. I then submit this information to the lender to give you a precise mortgage amount. If you’re not submitting any kind of documents, it’s not an accurate approval.
This type of pre-approval will be recognized when applying for the final mortgage amount. It can also be used to hold an interest rate. With interest rates predicted to go on the rise, this can be especially valuable.
Should You Still Use Pre-Qualification Tools?
These tools that pre-qualify you quickly are not entirely bad. They are helpful with providing some basic math, giving you an idea of what you might be approved for.
Sometimes, these tools will pull a credit score which can indicate if you need to do work to improve your credit before applying for a mortgage. These tools are just one piece of a very complex puzzle.
Like with all advertisements, we need to be cautious of accepting things at face value. The promotions of “the lowest rate” or “no credit approval” (please, please don’t believe those), are enticing. But if time, efficiency, and savings are important to you, then let’s work together!
I can’t promise I’ll pre-qualify for a mortgage in 60 seconds, but you can guarantee, it’s going to be a pre-approval you can count on.