The 4 Types of Loan Approval

You are either approved or your not, it's that simple!

1.  Prequalification WITHOUT credit review
-  Buyers have inquired about financing to purchase a home
-  A credit report is not reviewed; income, assets, or employment documents are not reviewed
-  Loan officer relies strictly on the client's word regarding ability to close on a loan
-  Some lenders call this a pre-approval

2. Prequalification WITH credit review 

-  Buyers have inquired with a firm about financing to purchase a home
-  A credit report is pulled and reviewed by a loan officer, but no income, asset, and employment documentation is requested.
-  When the lender tells this buyer they are 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 possibly NO closing
-  Many lenders call this a pre-approval

3.  Pre-Approval WITHOUT Underwriting Review

-  Buyers have inquired with a firm about financing to purchase a home
-  A credit report is pulled and reviewed by a loan officer
-  Income, employment and asset documentation is review by loan officer
-  Loan officer runs the file through an Automated Underwriting System
-  This is the type of pre-approval that causes the most headaches.  Until a real, live underwriter actually reviews the application and documentation, your loan is not really approved.
-  Most lenders call this a pre-approval

4.  NOLA-Notice of Loan Approval (THE RIGHT WAY)

-  The buyers have APPLIED with a firm for a mortgage
-  The loan application has been reviewed by the lender's underwriter, including full review of credit, assets, income and employment
-  A Notice of Loan Approval (NOLA) has been issued by the underwriter
-  Our clients can shop and make offers with the confidence to know their loan will close On Time, Under Budget, with No Surprises!

If you are going to make an offer on a home, and write an earnest money check (that you could lose if you don't close on time), don't you want to be SURE that your loan will close?