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We just got a pre-approval from 2 online mortgage brokers. A Realtor we just spoke to had us apply for a mortgage through a bank. She said that the online mortgage broker wouldn’t have even checked our credit score. (One of them took our credit info and only then approved us)

So, if we are approved by the mortgage broker for a loan, is it real? Or is it just them trying to get our business, and then we may still get denied? I’m really nervous about all this.

Thanks.

4 Thoughts on Is a pre-approval from a mortgage broker as good as one from a bank?
  1. Reply
    Christine
    February 6, 2011 at 12:32 pm

    Your real estate agent might be worried about the authenticity of it, because you went to an online mortgage company, instead of going to one in person and actually dealing with someone face to face. I believe that dealing with a mortgage company face to face/in person is better because they will give you multiple offers for different banks. That way if one bank falls through at the last minute, you can have a secondary and tertiary back up plan if need be. Your bank is only giving you that one offer, and if something happens in the mean time and they say that ‘now your not qualified’ or they changed the criteria, then you dont have anything to back up with. And when your getting ready to purchase a house that you abosolutely love, its quite crushing. During the time that your getting pre-qual from banks for mortgages, I believe its 14 days that you can get as many pre-quals as you want and it only counts toward your credit once, instead of each time.I’d get as many as you want to make sure that no matter what you dont lose the house. Especially now, witht the market, the banks seem to be doing what the want, and changing things at the last minute. Hope this helps and good luck with the new house!

  2. Reply
    Rowena
    February 6, 2011 at 1:27 pm

    A couple of things, it depends on whether the broker has actually submitted an application through the bank or just assessed it through their system on their computer – the latter is likely. The broker will normally have a system which assesses your conditional eligibility (much like an online calculator which assesses your borrowing capacity on any bank website), but it’s not a pre-approval.

    If you really want to go through a broker, confirm with them whether they have actually submitted your application and have been approved through the bank. If you have, you will get confirmation in writing from the bank the broker has chosen confirming this – until you have this I wouldn’t make an offer on a property.

    Be careful about going through brokers though, there are some good ones but also a lot of dodgy ones – sometimes deal through the bank is so much simpler and better.

    Secondly, a pre-approval doesn’t really mean much whether its through a broker, bank or otherwise – never ever sign a purchase contract unconditionally because u are pre-approved. The valuation and documents are still outstanding, so remember that pre-approved is not actually approved. But this is standard – just good to be aware of.

    Good luck!

  3. Reply
    A D
    February 6, 2011 at 1:45 pm

    I am skeptical of on-line lenders who issue what they call a “pre-approval” for a mortgage loan.

    A pre-approval should mean that you have completed a written loan application, your credit report has been pulled, your credit score determined and, your income, assets and debts verified. If you are working with a mortgage broker, the broker should have found the lender who has agreed to make you the loan.

    At this point YOU are pre-approved, now you have to have the property approved.

    If anything about your profile changes, or the lender’s criteria changes, your approval may be revoked. This is true whether you go through a mortgage broker or a bank lender.

    A mortgage broker works with different investors, including banks, who will actually make the loan to you and fund the transaction at closing. You are NOT getting a loan from the mortgage broker, so the mortgage broker can’t really approve you. Does that make sense?

    I understand your agent’s concern about a pre-approval letter from an internet mortgage broker. It may work out well, or it may not. Once you are under contract to purchase a property is not the time to find out you would NEVER have been able to get the financing.

    There is the perception that a pre-approval directly from a bank’s loan officer is more solid than one from a mortgage broker. I can tell you from my own professional experience that this is NOT always the case. I recommend you make sure the loan officer has verified all your information and you feel secure that the loan officer is competent.

    If your agent recommended the loan officer, it is probably because of past successful transactions.

    Good luck.

  4. Reply
    Rose
    February 6, 2011 at 1:55 pm

    “Pre-Approval” from any of them doesn’t really mean much…. It only means you might get loan approval and it is worth pursuing. There are many factors that go into loan approval in addition to the information you give them up front…. If you’re getting “pre-approved” by many lenders (mortgage brokers, banks, loan companies, etc.)….. just make sure you don’t give any of them any money up front. You really don’t ever have loan approval until an Underwriter signs off on “everything” and the loan is funded.

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