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Prequalification letter v Qualification

I have a pre qualification letter from USAA.  I wanted to put in a bid for a home (short sale) but the realtor refuses to accept my prequal letter and instead wants a qualification letter.  USAA will not give the letter without having a signed contract.  Neither party will budge.  I can't believe I can lose this house over one party not giving a paper to the other party first.  What can I do so I don't lose this house??? 
  • February 27 2014 - Brandon
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A pre-qualification letter is exaclty what is needed to submit a bid. NO LENDER or BANKER will provide an approval/commitment until they have an executed/signed purchase contract. You cannot underwrite a loan without a purchase contract. Either the realtor does not know what they are talking about, or you pre-qualification letter has something "squirly" on it. I assume you are doing a VA loan? Why don't you have the loan officer from USAA call or email the realtor to discuss what all they have looked at in regards to your income documents. I have done this for my clients in the past. Sometimes realtors are hesistant to work with people they have never dealt with which is why I suggest having your loan officer make a quick phone call.
  • February 27 2014
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The answers in this thread are really confusing me. You can get a credit approval prior to contract, we do these all the time, as do many other lenders and banks. These are sometimes known internally as "TBD Approvals." You complete a Uniform Residential Loan Application, your loan officer runs credit, and submits income and asset documentation to underwriting.

This is all PENDING a contract and does not trigger disclosures as there is no address for the subject property yet. If you haven't been advised this way, I would suggest making a lender switch. This is a much stronger way to make an offer as you go into the transaction already approved with conditions of: an acceptable appraisal, title report, insurance binder, and maybe a letter of explanation or two, and an additional paystub or bank statement during the process - this isn't all inclusive as every situation is different, but I think this spells it out a little better.

 Please reach out if you would like some direction with this. 
  • February 27 2014
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Ask your lender for a Desktop Underwriting approval and that should work. It can be done in less than 24 hrs provided you give your lender all your financial documents to verify income and assets.
  • February 27 2014
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USAA seems to have pre approved you but they are calling it pre qualified. From the brief overview I've read, it's time for a new agent. 
  • February 27 2014
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It sounds like the seller is looking for a pre-approval letter as opposed to a prequalification letter. The prequalification letter is based on what you say your income is, the pre-approval letter means the lender has verified your income and employment.  I have clients who have obtained pre-approval letters that meet the required criteria all the time. I'm not sure why this is going to take three weeks with your new lender . . . Also, there is no reason why you should have to switch from VA to conventional unless there is a credit issue where you don't meet the VA credit threshold. If a credit issue is at the root of the situation, it is very possible that the three week timeline is required for a quick credit repair (i.e. rapid rescore).
  • February 27 2014
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Why did you not call me? I gave solid advice for a reason, to earn your trust and business. I will call the realttors bluff and get you a bid in. As far as I can tell the reatlor is being "shady" as nobody does this!

  • February 27 2014
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We had a three way phone call just as you suggested.  USAA said the exact same thing you said.  Realtor kept saying my income had not been verified (my answers for the pre qual came straight off my tax returns).  USAA had already run credit check.  I have all the money for down payment, closing, escrow, etc. Tax returns will match what I said, credit check was good.  

Yes, this was going to be a VA loan.  Finally, USAA referred me to Military Family Home Loans to apply for conventional loan to try to get approved in order to get commitment letter since USAA stopped giving them a couple of years ago.  Did the application with them that night, gave them tax returns, bank statements and they ran credit.  So far everything looks positive but they said it could be three weeks before I hear anything.  This will cost me more with the additional down payment, etc but I am still able to go forward.  There is a good possibility the house will be gone by then. I am pulling my hair out.  
  • February 27 2014
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