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We recommend
being pre-approved for a mortgage before starting the home
shopping process. A seller will most often take a pre-approved buyer’s
offer over a pre-qualified buyer. Why and what is the difference
between being pre-qualified and pre-approved?
Being
pre-qualified for a mortgage is a service the loan officer
provides to give the borrower an idea of how much he can afford. This
process can be done over the phone. The borrower provides information
regarding debt, income, assets, and answers to few credit payment
questions, such as, did you ever have a bankruptcy, and do you pay
your debts on time. If the borrower gives accurate answers to all the
questions, he/she will get a closer idea of how much he/she can afford to
borrow.
Being
pre-approved for a mortgage requires the borrower to complete a
standard mortgage application and supply the necessary
Items Needed to Complete A Mortgage Application. The loan
officer pulls a credit report, verifies the borrower's income and takes
other preliminary underwriting steps to come up with a maximum
allowable loan amount. After the lender has approved the borrower,
the lender gives the loan officer a conditional approval
(conditions such as clear
title report, underwritten appraisal, and final review),
and then the loan officer can write a pre-approval letter to you and
your real estate agent stating your approved maximum loan amount.
The
pre-approval letter accompanies the contract so the seller’s agent and
the seller know the buyer is serious and able to move on the purchase.
The cost for
this service is $25, the cost of a credit report.
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