Prequalified Doesn't Mean Mortgage Educated

I had a client this week who got a call from someone pretending to be part of my team, even confirming my name to sound legitimate. After taking some general info, they emailed him that he was prequalified to buy, without ever asking for a single document. Meanwhile, I was still gathering a full work history and a few other pieces before I could tell him anything real about his numbers.

That is more common than so many realize. A prequalification letter answers one question, can this person qualify for a loan, and even that isn't always an answer that can truly be counted on if the proper review was not complete. A pre-qualification or pre-approval does not answer the questions most buyers actually care about, what will this cost me to buy, and what will it cost every month after I get the keys.

Real payments come from more than the loan amount on that letter. Principal and interest are only one piece. Property taxes and homeowners insurance get added on top, specific to the home, not a generic estimate. Mortgage insurance, if required, is another layer, and its cost can vary meaningfully based on credit score and down payment, even for two buyers borrowing the exact same amount. An HOA adds even more. Even rates can shift multiple times throughout the week. Unfortunately, for a lot of buyers, the first time they ever see a real number is after their offer is accepted and disclosures land in their inbox.

If you’re an agent, you have no idea if the buyers walking into your open house got handed a letter and told to go shop, or actually got an education on what it all means. It is a great opportunity to ask questions and educate. You might be the one who catches what a buyer doesn't know and potentially creates a connection with the ones who show up to an open house without a great agent or lender in their corner yet. Having information on different mortgage types, as well as tangible figures on what a real monthly payment on your listing might look like, could be incredibly helpful to someone who has no idea. If you need marketing material for your listing, reach out and I can put together real payment figures so you have something tangible to hand buyers along with a flyer that goes over the different types of common mortgages.

If you're a buyer, ask your lender exactly what they reviewed before approving you to shop including income documents, credit report, assets, or if they just used what you entered into the application. That is the difference between just being pre-qualified and being fully pre-approved. Ask for the full payment breakdown on a few different scenarios, not just the price you can go up to, before you fall in love with a house. If your lender is asking for more information or documentation, they are trying to make sure you are set up for success. If you don’t have a lender yet, I would love to set up a discovery call to talk about your goals and how I can help you make them a reality.