Palmdale Mortgage

Qualification is the possibility that your income, assets and current debts qualify you for a loan of a certain amount. The pre qual as it is known can come from a lender or a loan officer or a realtor for that matter. You can probably go online and print one out that is about how much they are worth.

A lot of times Realtors would do a basic pre qual before they haul you around looking for houses. In a seller’s market  they ask borrowers to become pre-approved by a lender because it is more reliable than a qualification, and lenders are willing to provide it free of charge. Home sellers have also learned to ask potential buyers for a pre-approval.

Pre-approval is a conditional commitment by a lender to make a loan prior to the identification of a specific property. On a pre-approval the lender verifies the information you provide and checks your credit. A pre-approval will stipulate a loan amount or monthly payment, and maybe the loan type or the price.

The lender’s commitment under a pre-approval is always conditional. Pre-approvals don’t have expiration dates, but some considerable time may elapse before the borrower receiving a pre-approval comes back to convert it into an approval. During that period, things can happen that cause the lender to back off. For example, the borrower’s credit takes a dump or  loses of income. No one can reasonably expect a lender to approve a loan in those circumstances.

The impacts of  market changes such as the tightening of underwriting requirements that occurred in 2007can have a serious effect on the whole process.

Approval is a commitment by a lender to make a loan. Unlike a pre-approval, a specific property  is identified, and the loan details are spelled out. These include the type and purpose of loan, down payment, and type of documentation. It will also include an interest rate, even though a rate is not firmly established until it is locked. The bottom line is the lender intends on closing the loan

Sometimes one or more of the conditions that accompany the approval are not met. Approval letters contain “Prior to Doc” and “Prior to Funding” conditions, which are the details that must be completed before the final documents are drawn, and before funds are disbursed.

Lock is a commitment by the lender to a specified price – rate and points. Ordinarily, lenders lock at the borrower’s request, and view the borrower as being committed as well, though they don’t always communicate this very well. Since locking imposes a cost on lenders, some of them charge a nonrefundable fee which may be credited back to the borrower at closing.

Prospective home buyers should qualify themselves, since they are much better positioned to know what they can afford than anyone else.Getting pre-approved is a way of establishing their serious to home sellers and Realtors. Only one pre-approval is needed, and it does not commit them to the issuing lender. It is only fair, however, to include that lender among the loan providers you shop when you have a contract .