Why do pre-approvals have such a bad rep? Realtors will often ask their clients if they are pre-approved, in order to ensure that they are not wasting their time showing the client properties for which the clients cannot qualify or cannot afford. But what, in fact, is a client getting, when they are pre-approved?

We at the Welch & Co Team, believe that pre-approvals are not worth the paper they are written on….

Here are some of the many reasons why we feel this way:

1) most pre-approvals are automated, which means that no underwriter is viewing the application: few and far between are the applications that are “vanilla” anymore, meaning employment as full time permanent salaried positions, with high end credit scores. All applications should be reviewed and underwritten in order for any pre-approval to be value.

2) if the application is for a purchase with < 20% down payment, the deal needs to be underwritten by both the lender and the insurer: even underwritten pre-approvals are not sent to the insurer for review.

3) pre-approvals do not taken into consideration the property, and a key part of the underwriting process includes the review of the property

4) most banks do not review documentation prior to issuing a pre-approval, which often leads to incorrect amounts in terms of capacity for the client (i.e. client says they make $50k per annum but are paid hourly – this means that a 2 year average has to be factored in and the 2 year average is in actuality $44k – hence their capacity to purchase would decrease substantially).

5) approximately 95% of pre-approvals do not reflect the lowest or best interest rate in the market place – rates can go up or down. Furthermore, not all lenders offer pre-approvals, and as such the client’s application may not even end up with the same lender with whom they were pre-approved!

6) not all of a client’s needs or goals are factored in when a pre-approval is issued.

What do we recommend INSTEAD of a pre-approval? At the Welch & Co Team, you will get full underwriting up front, of your application and documentation. If there are any issues that might affect your financing, you will know about them as well as the reason that they might be an issue. Each and every file gets our individual attention and is underwritten in order to ensure that there are no surprises! This is is also why we need all of your paperwork BEFORE we send in your application! Call us at 613-546-2989 to book your appointment today. We are ….More than a dotted line….