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1. This article over at Searchlight Crusade discusses mortgage pre-qualification. He views it essentially as just another of the hoops that have to be jumped through in the home-buying process. Being pre-qualified doesn’t mean as much as it sound like. However, not getting pre-qualified does say at lot. One quote I particularly liked was: “It takes several hours to do an accurate “pre-qualification” correctly, but a Wildly Assumptive Guess takes just a few minutes. You may imagine which is done more often.”

   Comment by Anonymous — Apr 21st 2006 @ 7:41 am

2. There’s a difference between pre-qualification and pre-approval (although in practice there probably isn’t in a lot of cases). Pre-qualification typically falls into the ‘wildly assumptive guess’ category, whereas a preapproval is (supposed to be) more thorough — it involves pulling credit reports, verifying the availability of downpayment funds, verifying employment history, etc. In the case of our buyer, they went through a reputable local lender and they have a 20% downpayment. I also know what he does and where he works, so I am confident that they can afford our house (assuming that the lender did actually check their credit prior to issuing the pre-approval letter and locking their rate).

   Comment by nickel — Apr 21st 2006 @ 9:48 am

3. I’m glad to hear it. The fact that your buyer actually does have the 20% downpayment means that qualifying for a loan is going to be easier. It still amazes me the number of people who don’t have any idea what it is costing them to not put down a downpayment. As long as the bubble is inflating quickly enough, the greater leverage offsets the costs. Even if the doomsayers are wrong and there is no real estate bubble, all it takes is a period of very little appreciation for the additional costs of a more expensive loan to swamp any profits.

   Comment by Anonymous — Apr 21st 2006 @ 1:21 pm

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