Real Estate - 买房 - Buying a Home? (4) Mortgage Pre-Qualification

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Mortgage Pre-Qualification
Should you get pre-qualified or pre-approved

That depends on whom you ask. It seems that definitions can vary from lender
to lender and individual to individual. While most discussion, written and
verbal, compares pre-qualification to pre-approval, lenders actually offer
three levels of services to qualify a borrower for a
mortgage-pre-qualification, pre-approval and final commitment ("Pre-Qualified
or Pre-Approved: What's the Difference?" posted June 12, 2000, at the
Cincinnati Board of REALTORS®, cbor.org)

Pre-Qualification
Usually, in just a 15-minute phone call, a lender can pre-qualify you for a
mortgage. Because underwriters do not validate credit history or employment
information for pre-qualification, this preliminary review results in a
non-binding opinion regarding how much of a mortgage a borrower can afford. By
seeking pre-qualification, you'll come away with an estimated monthly payment
and a price range to shop based on the loan size. This information, however,
is intended to be a guide as you begin the home buying process. It does not
guarantee that you'll be approved for a mortgage.

Pre-Approval
The closest thing to a guaranteed loan comes with pre-approval. After
completing a formal application and providing all the necessary documentation
related to employment and financial disposition, the file, along with a full
credit report, will be thoroughly evaluated and verified by the lender's
underwriters. If everything meets to their satisfaction, you will be cleared
for a loan of a determined amount. This in no way means you have a firm
commitment though. The loan is subject to a fully executed sales contract and
an acceptable appraisal.

But being pre-approved can give you a sizeable advantage. Many lenders present
borrowers with a letter, which may give you more leverage with a seller.

Firm Commitment
The lender can issue a firm commitment once the seller accepts your offer, the
home has received a satisfactory appraisal, and your credit has been
rechecked. If all checks out, you've got a mortgage!

To help eliminate unwanted surprises, keep these tips in mind:
•Don't divulge to a seller how much you've been approved for.
•Be alert. If your lender hasn't requested documentation, it's a good bet
that you've been pre-qualified rather than pre-approved.
Contact your lender if your financial circumstances change prior to closing.
The pre-qualified or pre-approved status may no longer be valid