What Homebuyers Should Know About Basics for Mortgage

Loan Qualification (or "prequalification") is an opinion that your income, assets and current debts qualify you for a loan of a specified amount.  This may come from a lender or Realtor.  This opinion usually does not take your credit into account, and no one is committed by it.  Preapproval is a conditional commitment by a lender to make a loan prior to the identification of a specific property. On a preapproval, unlike a qualification, the lender verifies the information and checks your credit.  A preapproval will stipulate a loan amount or monthly payment, but not the loan type or the price.  Approval is a commitment by a lender to make a loan, and a specific property (and sometimes appraised value) is identified. Some loan details are spelled out, including type and purpose of loan, down payment, and documentation, proposed interest rate. Lock is a commitment by the lender to specified price, rate and points.  Prospective home buyers should get qualified with the lender as soon as possible.  They should also get preapproved to establish their believability to home sellers and Realtors.  We recommend you now contact your trusted mortgage broker.
Posted by Harrison K. Long, Explore Group, March 31, 2008