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Pre-Approval Process
Many
buyers apply for a loan and obtain approval before
they begin the search for the home they want to buy.
Unless a person is going to pay cash for the home, a
loan application will have to be made sooner or
later. Pre-qualification by a lender is a simple
procedure by which you get an opinion as to how much
you qualify for and can discover any obvious obstacles
that might cause problems. It is a good idea, but it
is not as thorough as pre-approval.
Pre-approval entails making a complete application,
ordering the credit reports, verifications and
everything for the borrower. The Mortgage Company
will issue a commitment subject to a specific interest
rate and points and the satisfactory appraisal when a
property is located. There is usually a time limit
placed on pre-approval commitments. You’ll want to be
ready to look at homes and make a decision after you
receive your pre-approval commitment.
There
are several distinct advantages to using the
pre-approval program:
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You look at the "right" homes
that you can afford. Choosing a home that you may
not be able to afford won’t disappoint you.
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You save money dealing with a seller who is comfortable
about “tying up” their home with a party who has a
definite loan commitment. This is one less
contingency for the seller to be concerned with.
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You close more quickly
because in most cases, the thing that takes the most
time is getting a mortgage. The credit reports and
all of the verifications take time to be mailed out
and returned.
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You minimize trauma of not knowing whether or not you qualify.
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