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Loan Preapproval vs. Loan
Prequalification
Once you've done
the basic calculations and completed a financial statement, you can ask a lender
or loan broker for a prequalification letter saying that loan approval for a
specified amount is likely based on your income and credit history.
Prequalifying lets you determine exactly how much you'll be able to borrow and
how much you'll need for a down payment and closing costs. Unless you're in a very slow market, with
lots more sellers than buyers, you will want to do more than prequalify for a
loan -- you will want to be preapproved -- that is, guaranteed for a specific
loan amount. This means a lender has already checked your credit and evaluated
your financial situation -- rather than simply relying on your own statement
about your income and debts. Preapproval means that the lender would actually
fund the loan, pending an appraisal of the property, title report and purchase
contract. Having a lender preapprove you for a loan is crucial in a competitive
market; without it you stand little chance of your offer being accepted. Pending... |
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