Pre-qualifications and pre-approvals
April 15th 2010 Posted at Mortgage
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Pre-qualifications and pre-approvals
Pre-qualifications and pre-approvals are your weapons against not being able to find a mortgage after you have found the new house of your dreams. It provides you with an edge because you may have already obtained some sort of financial agreement with your bank or mortgage broker. Having these things can put you in a stronger negotiating position when you are ready to purchase a house.
A pre-qualification is an informal agreement between you and your lender. A background check will not be done at this point because the bank will give you an opinion or what they will lend you based on your own personal opinion. The bank relies solely on the accuracy of the picture you portray of yourself since there is no background check. There is no charge involved in this process and you are under no obligation to take out a mortgage. It’s great because you can hunt for a mortgage with a better deal or lower interest rate while you have a pre-qualification.
A pre-approval for a mortgage is more serious than a pre-qualification. The bank will check your credit history, employment information, assets, and liabilities in order to pre-approve you for a mortgage. Getting a pre-approval is really getting the same thing as a mortgage except you can get pre-approve for the loan before you actually look for a house. A pre-approval can really give you more negotiating power because its means the bank is already willing to lend you an exact amount of money. This way you don’t have to be worries about the bank turning you down for a loan. Some lenders charge for a pre-approval so make sure you are really going to buy a house soon or you will be wasting your money getting a pre-approved mortgage.