What’s the difference between being Pre-Qualified and Pre-Approved?
Prequalification involves obtaining some basic information about the borrower’s
income and debts and then calculating the maximum mortgage the borrower might
obtain. A “pre-qualification” is simply an estimate of a borrower’s borrowing
capacity, but is not a commitment to approve the loan.
Pre-approval is a very different and more valuable procedure. Lenders offering
pre-approvals actually complete virtually of the necessary verifications
(typically except for the property appraisal) upfront, before the borrower has
actually found a home or even begun to look for one.
By becoming pre-approved, the borrower receives an actual commitment from the
lender to approve a loan for a specified amount at a specified rate, contingent
only on a satisfactory appraisal of the house the borrower ultimately decides to
purchase.
Being pre-approved has advantages for the Buyer:
1. The certainty of knowing not only how much you will be able to borrow, but
also that the lender actually will approve a loan for that amount, and being
able to address potential problems before you delay the purchase of your dream
home.
2. A pre-approval can be used as a negotiating advantage, especially if several
buyers are competing for the same house, or if the Buyer wishes to take
advantage of a situation where the Seller is anxious. Sellers will be more
likely to deal with a Buyer whose mortgage approval is assured over one whose
loan ultimately may be rejected.
How to avoid Mortgage Fraud
Mortgage fraud has been a part of the real estate industry for a long time. It
has been running rampant recently, so more Borrowers are aware of the
possibility of it.
Here are some tips to recognize and avoid becoming a victim of mortgage fraud:
Get references for your mortgage professional, or better yet, ONLY rely on a
professional to whom you have been referred by your Buyer Agent. We want to give
you the best, most ethical Lender choices to insure the transaction closes
successfully. Our reputation and future success depends on satisfied clients,
and no one sale is worth losing our stellar reputation for integrity. We do NOT
receive any fees for referring the Lenders we use, so you do not need to be
concerned about a conflict of interest.
Be wary of "no money down" loans.
Read carefully and be sure you understand everything you are asked to sign, and
talk to your own attorney if you need anything explained to you.
Do not sign any documents with information left blank, or that contains
inaccurate information.
Deal directly with a reputable local lender or mortgage broker. Beware of doing
business with Internet mortgage brokers. There are some that may provide
reputable service, but that has not been our experience.
Insist on getting a complete set of documents at the closing.
Rely on your instincts. If it is “too good to be true”, it probably isn’t! If
you work closely with us in the whole process, we bring the benefit of our
experience and instincts, too. As your Buyer’s Agents, we are actively involved
in the mortgage process and communication with your Lender. If they are
unwilling to communicate with us, it is a signal that there may be something
amiss.
Find the best Lender for your needs
As your Buyer’s agents, we have a number of reputable and experienced Loan
Officers, Mortgage Brokers, and other Lenders to whom we can refer you. We
believe that we can make this process much easier for you, by allowing you to
find a good “fit” while comparing truly professional service for the price you
pay for a loan.
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