What does a builder's preferred lender need to have and check to qualify me for a loan to the builder vs. what is required to get a pre-approval? My wife and I have been through both with our lender, but the builder we are buying from says they will not accept our contract if we do not apply (get qualified) with his lender. We do not want our credit run again, but the housing market here in silicon valley can be rough and we don't want to miss out on this place.
2006-12-02 05:49:33 · 8 answers · asked by gwava0 2 in Business & Finance ➔ Renting & Real Estate
A pre-qualification is simply where any mortgage person states they feel you are qualified for the loan you seek. It can be strongly worded or very vague and does not hold much legal clout. A pre-approval means your income/assets/credit, etc as required have been verified and that you will be approved if you can meet a list of conditions. Most builders will require this be done with their preferred lender simply because it allows them to protect their financial interest and not remove the property for sale to unqualified buyers. And let's face it, the same bank often gave them construction financing and the builder is returning the favor by forcing clients into their hands. You are not legally nor contractually required, however, to use their lender for your financing. Since most people do not want to go through the process twice, they stick with the builders lender and often pay too much for the mortgage and/or get substandard service.
So, you should expect to complete their paperwork and provide the minimum documentation for them to notify the builder you qualify. After that, since it's my business, I suggest you work with a trusted mortgage broker who has access to more programs, rates, and that can provide you with unbiased answers to all your mortgage questions.
With 20 years in the field and in the Silicon Valley, I would be happy to assist you. Local references are always available.
Please feel free to contact me via http://www.slarson.com/contact or email me directly at Steve@SLarson.com
2006-12-02 10:44:30 · answer #1 · answered by Anonymous · 0⤊ 0⤋
Mortgage preapproval involves the application and approval for a mortgage prior to selecting a home for purchase. A preapproval may also be used in conjunction with a refinance transaction, but for this explanation, the focus will be on home purchases.
A preapproval is not a binding commitment on either the applicant or lender, but rather an indication that the lender is ready, willing, and able to extend a mortgage to a mortgage applicant once a suitable property has been secured via a real estate contract.
Pre-approval is usually good for 60-90 days. I am not sure about the legality of forcing you to use inhouse financing. I've seen incentives offered if you use the builder's lender but the financing is generally a purchaser's choice.
2006-12-02 06:00:31 · answer #2 · answered by Gwen R 2 · 0⤊ 0⤋
Personally I would shop around for a lender. Get your credit score
and give it to the lender tell them that you are not interested in them doing a credit check until they tell you what they can do for you and what you will need up front. We just went through the same thing and I do not think it is fair to be punished for shopping around, The more credit checks you allow the worse your credit will look. The fact is you can not lock someone into something without them running a credit report. I would NOT GO with this builder if he tells you that you have to go with his lender.I mean as long as he gets the money why should he care?? Sounds VERY fishy I would stay away from that guy. Just to make sure what the norm is in your area call a real estate agent and ask if he is on the up and up. Also call the BBB and check on him and the lender. Call eveyone you can to check on this guy. BY the way GOOD LUCK
2006-12-02 05:59:56 · answer #3 · answered by withoutaname 2 · 0⤊ 0⤋
Being pre-approved does not qualify you for the loan. To be qualified by a lender, you have to go through all the credit checks again. Good Luck!
2006-12-02 05:53:46 · answer #4 · answered by goldenmiracle1 1 · 0⤊ 0⤋
A builder (or any seller) CAN require you to be pre-approved by the lender of their choice.
I require that on many of the properties I am hired to market.
The builder CANNOT require you to use their lender. That would be a violation of RESPA (the federal law governing loans on residential property) to require that a buyer use a particular lender,
2006-12-02 11:04:30 · answer #5 · answered by triad_historic_homes 2 · 0⤊ 0⤋
First of all, check their credentials. Normally if you are pre-qualified by your bank/lending agency that should qualify you for your builder. Your bank/lending agency should have a good reputation in your community. That fact that your builder is making this request could be that your lender is not reputable. Or your builder might be scamming you. Please be careful, before choosing. Do some research, before you give out your personal info again.
2006-12-02 05:59:41 · answer #6 · answered by drgnotary 3 · 0⤊ 0⤋
Pre-approved means you have a loan up to a certain amount and they lender will give you paperwork to prove you are pre-approved to show realtors and sellers.
Being qualified just means you meet the criteria, usually salary and debt distributions, to be able to apply for the loan.
2006-12-02 05:57:56 · answer #7 · answered by Anonymous · 0⤊ 0⤋
Being Pre-Approved means that you are almost there to loan from that company. They basically need to do more credit checks on you before they make a decision.
2006-12-02 05:58:50 · answer #8 · answered by CT 6 · 0⤊ 0⤋