What are the red flags to watch out for when dealing with pre-qualification lenders?

I can’t agree more. I explain to my clients the exactly that Pre-Approvals unless lenders do a full assessment it might as well be written on a piece of toilet paper.??

There is no such thing as a "pre-qualification lender", do you mean pre-qualification letter? There are two common types of lenders, a Mortgage Broker or a Mortgage lender (usually a bank). Either of these types can issue a pre-qualification letter and/or a full approval. The sentence about overstepping their boundaries... is a bit silly. They can ask for whatever they need to in order to qualify the client for the mortgage. The more they ask for, the stronger your pre-qualification or full approval letter is. In fact a good lender wont issue a pre-qualification letter until they at least look at your credit scores. The "not so good" lenders wont ask for anything and just issue a letter. Those are the ones to stay away from (opinion)

A pre-qualification is just an estimate, and means nothing without the verification of documentation and review of income calculation. The lending industry does not treat all income the same nor does it count all income sources. To be sure affordability criteria is met, a full pre-approval should be issued prior to any offers being written. Doing the work up front makes home buying less stressful (my experience based opinion)

Our role as lenders is to advocate for home ownership and encourage all who are interested to apply for home financing. Only with a complete application, supported by all relevant documentation, can any lender provide specific offers of rates and closing costs. As a broker I show the rates of multiple lenders specific to the applicants qualifications. There is always a price leader and a service leader and I advise my clients on which lenders are easiest to work with and have the lowest rates. The loan process is the same at all lenders, but some make the process feel easier in the way they communicate and manage the documentation.

Beware of "junk mail" offers that seem to insinuate they are from your current lender. These companies ride on the legitimacy of your existing lender to rope you into their own companies. Other scams include offering quick cash or easy loans, or no credit checks. Any legitimate lender will be checking credit and following legally required documentation steps. Notice any discrepancies in company addresses, and check for a BBB business profile.

Yes in todays information age, "Trust" is vital, and I advise working with a lender that is willing to show full cost details. Rates, Points, Origination Charges...

I also recommend working with a lender that is not just in communication with you, but also coordinates with the real estate agent. The agent will ultimately negotiate the offer and contractual terms. A good lender is strategizing withe the real estate agent on every offer to identify opportunities to lower the cost of financing and total cost of home acquisition. Lender Credits, Sellers Credits, Bidding under or over asking... Work with someone who brings financial strategy to the table, not just one approval letter.

So I'm seeing lots of little "errors" with this article in general.. lots of words and terms that aren't quite correct. I think AI is doing a good job overall but when you mince words, especially on topics that someone isn't familiar with, it confuses people. Its much better to explain things directly without the goal of sounding smart, rather the goal of explaining things clearly.