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The question originates from this post.
A WSJ Market Watch article says pre-approvals are vanishing from the mortgage landscape.
A Forbes article says a pre-approval's value is little better than a pre-qualification.
- Pre-approvals are a loss-leader for mortgage lenders- Pre 2008, pre-approvals were easier to do, and meant less- Post 2008, pre-approvals require more effort by the lender- Currently, many pre-approvals do not result in a loan, so it is wasted lender money/effort
From a big lender website...
A pre-approval is the most accurate option. It takes into account verbal information provided by you, in addition to looking into your credit report. This last part is key, since it allows your mortgage banker to assess your current debt-to-income ratio.
From a layman's perspective, this is a pre-qualification with a credit check. The website's fine print states you can still be denied. Yet, REAs want the pre-approval to support their client's offer. But, the REA has no skin-in-the-game when it comes to the cost/effort required to provide a pre-approval.
A pre-approval is a marketing loss/leader (for the lender). Since 2008, the effort a conscientous lender will expend on a pre-approval is almost as extensive as the actual underwriting...sans the property. And, this has to be done with little expectation of a payoff.
As a consumer, it sounds like a true pre-aprroval is going-going-gone.
What are the mortgage pros' perspectives?
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