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LESSON 16: PREQUALIFICATION AND PREAPPROVAL
(continued from previous page)
Preapproval
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Goes
a step further than prequalification. The lender contacts the
borrower's employer, bank and other places to verify the person's
claims about earnings, assets and credit. In return, the borrower
receives a letter stating that he has mortgage approval for
a certain amount. |
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Makes for
a faster closing process once the borrower selects a house because
the lender has completed many of the qualifying and underwriting
steps.
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Improves
your chance of reaching an agreement on purchase price with
the home seller. That's because the seller doesn't have to worry
that she'll accept your offer, then be left hanging when your
lender denies your loan application. |
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May involve
a charge for pulling your credit report and/or an application
fee that will be applied toward your closing costs. |
Remember that if any of your
financial circumstances change before closing on the sale
of the home, you must contact the lender. The loan prequalification
or preapproval may no longer be valid.
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