Good Faith Estimate

A disclosure statement that must be given to all mortgage loan applicants within three business days containing a mortgage lender’s “best guess” estimate of all the costs associated with borrowing.

The Underwriting Process

The process by which a lender decides whether a potential creditor is creditworthy and should receive a loan.

Closing Costs

Fees and expenses, over and above the price of the property, incurred by the Buyer (borrower) in the property ownership transfer. Also known as Settlement Costs.

The Pre-Approved Buyer versus Pre-Qualified

There is a big difference between the pre-approved Buyer and pre-qualification. When you’re under contract to buy a property it’s beneficial to have your mortgage application already approved.

Pre-Qualification: Pre-qualification is an informal discussion between borrower and lender. The lender provides an opinion of the loan amount that you can borrow based solely on what you, the borrower, tell the lender.

Pre-Approval: Pre-approval is a more rigorous process. Loan pre-approval is based on documented and verified information regarding your employment, income, liabilities, and the cash available to close on a home purchase.

Going through the pre-approval process demonstrates your seriousness to house Sellers — it places a Good Borrowing Seal of Approval on you, the Buyer. A lender’s pre-approval letter is considerably stronger than a pre-qualification letter. In a multiple-offer situation, a short sale or a bank owned property, Buyers who have been pre-approved for a loan have an advantage over Buyers who have not yet been pre-approved.

Forms 22A/22AR (Financing Addendum)

I will tailor your offer to protect you with the terms of financing that you will be applying for. I will obtain this information from your lender to be sure we protect you in the offer. We will need to know what type of financing you will be applying for and if we need the Seller to contribute toward your closing costs.

Appraisal

A professional written opinion of the market value of a property from an appraiser chosen by your lender.

Also Read: Tips to Help Buyers Through the Loan Process