Many borrowers
start the mortgage process by becoming pre-qualified.
Unfortunately, there are many degrees of
pre-qualified. Borrowers often find out
later that the pre-qualification was subject
to conditions the borrower could not meet.
Keep in mind that loans are approved
only after applications are completed, information
on the application is verified, and credit
checks are performed. Additionally,
when a loan is approved, a written commitment
letter is issued, detailing the loan amount,
terms and conditions required for closing.
Many borrowers mistake a loan representative
telling them things "look good"
as being pre-qualified.
Beware of this practice and instead, take
the following steps:
Complete a full credit application with
your selected mortgage company.
Provide full documentation for the program
applied for.
Ask that your application be fully processed
for a “credit-only” underwriting.
Many enders or brokers
will provide loan commitments without a
property being selected.
Ask for a commitment letter, outlining the
loan amount, program, rate, and terms approved.
Be sure that all contingencies for getting
the loan are disclosed, in writing, on
the commitment letter. A complete pre-commitment
will only be contingent on the appraisal.
Many borrowers fail to realize that at some
point, they will have to journey through
the entire loan process. Pre-qualifications
do little good in the final analysis. Once
a borrower has gone through these steps
and received an actual written loan commitment,
they can proceed with confidence through
the remainder of the transaction.
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