Frequently asked questions.
What is Pre-Qualification?
Pre-qualiﬁcation starts the loan process. Once a lender has gathered basic information about a borrower’s income and debts, an opinion can be made as to how much the borrower should qualify for in purchasing a house. Since loan programs vary between credit, debt and down payment requirements, borrowers should get pre-qualiﬁed for each loan type that they qualify for and are considering.
Being pre-qualiﬁed is only a limited analysis and does not hold a lot of weight when it comes to negotiating a contract or reassuring a seller. There are many aspects to fully qualifying that could change a borrower’s ability to qualify for a mortgage. Some of these things are: credit, length of employment, type of income, debt, liens or judgments, property type or condition and other issues that will be brought up during the approval process.
Although it is tempting to start your home search prior to getting a pre-approval, we suggest you get that step completed sooner than later so you are armed with the knowledge of your real shopping budget and the power to negotiate the best deal.
What is a Pre-Approval?
Being Pre-Approved lets you know your price and term limitations and therefore removes some of the stress of ﬁnding the perfect home.
Being pre-approved also empowers you during the negotiation process. It gives the seller conﬁdence in knowing your ﬁnances are one less aspect of the transaction they need to worry about. You’ll need a pre-approval to bid on a bank owned or short sale home. Your oﬀer won’t even be considered if there are several oﬀers on a home if you don’t have a pre-approval.
A pre-approval gives the seller assurance you can aﬀord their home and therefore your oﬀer is given serious attention. This is achieved after the lender has veriﬁed all information you have submitted in the application process.
How long is a Pre-Approval good for?
A ” true” pre-approval letter is evidence that a Buyer has had a lender verify their assets (source of funds), income stream and creditworthiness. This preliminary and necessary step is generally valid for 60-90 days and can be updated by re-verification of some of the documents.
Is there a cost to apply?
Generally no, but occasionally the cost of a credit report will be charged. All other up-front fees, such as an appraisal or application fee that may apply, will be disclosed to you as part of the application process and collected following your receipt of the early Truth-in-Lending disclosure and your approval to continue with the application.
How long will the loan process take?
The loan approval and funding time frames vary depending on the type of transaction and the complexity of your personal ﬁnances. The process can take as little as 10 days, and sometimes up to 45 days.
What is a lock-in rate?
The lock-in rate represents the interest rate you choose and will be the interest rate used to factor your monthly payment. The lock-in secures the interest rate during the process of your loan approval, as long as your loan is processed and closed prior to the rate expiration date. This date is given to you when you lock-in the rate.
When can I lock-in my rate?
You can lock-in your interest rate once you have an accepted oﬀer on a property. Your loan oﬃcer will discuss these options with you upon taking your loan application.
How long will my rate be locked?
Depending on the type of transaction and the time you need, lock periods can be valid anywhere from 15 days to 180 days.