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May 09, 2008

MLS Listing Service

Prequalification vs. Pre-approval vs. Final Approval/Commitment

COMMONWEALTH MORTGAGE SERVICES, LLC.


Call Toll Free: (888) 896-3787

www.commonwealthmortgage.com

Many loan officers don’t know the difference between a mortgage prequalification, a mortgage pre-approval and a final approval known as a loan commitment.  A prequalification is when a mortgage company evaluates your credit report and other information you provide to estimate the amount of mortgage you can afford.  Typically, your accounts and employment information are not verified and a letter of prequalification is provided based on the information provided. A pre-approval occurs when a borrower’s credit and employment are verified, along with other relevant financial items, and the borrower is approved subject to the appraisal and clear title of the property. Final loan approval and commitment occurs when the property has been appraised, the title is ready to close, and all documentation requirements have been met.

Many loan officers are ill-equipped to handle purchase transactions due to the sensitivity of the closing and the lack of understanding of basic purchase terminology. A standard offer as well as the purchase and sale agreement have a mortgage contingency clause allowing for a buyer to retain his/her deposit if notice is timely given if he/she cannot obtain financing due to a loss of employment or other unforeseeable circumstances that affects the person’s mortgage qualifications. Most loan officers don’t know if this “mortgage contingency” clause relates to the buyer’s prequalification, pre-approval or final approval/commitment.  So-called “seasoned loan officers”, “senior loan officers”, and other loan officers with similar “titles” do not understand or have ever read an offer contract or purchase and sale agreement.  Even a one day delay on a closing can cause a buyer to lose his/her entire deposit.

You will not be able to find a mortgage professional with more experience, honesty, education and integrity than Michael J. Richards, Esq., owner of Commonwealth Mortgage, LLC. Take advantage of low rates along with a variety of mortgage products available through Commonwealth Mortgage, LLC.

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MASSACHUSETTS MORTGAGE LENDER & BROKER, LICENSE NUMBER: MC5054 - WE ARRANGE MORTGAGES BUT DO NOT FUND THEM . NEW HAMPHSIRE MORTGAGE BROKER, LICENSE NUMBER: 13538-MBR . CONNECTICUT FIRST MORTGAGE BROKER, LICENSE NUMBER: 20099 . CONNECTICUT SECOND MORTGAGE BROKER, LICENSE NUMBER: 20100 . MAINE LOAN BROKER, LICENSE NUMBER CSO9502 . U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT TITLE II LOAN CORRESPONDENT, FHA LENDER ID NUMBER: 25254-0000-5