Understanding real estate terms and economic terms will educate you during the buying and selling process. It is also important to understand the difference between pre-qualification and pre-approval. Pre-qualification issued by a loan officer determines the value of the loan you may be qualified for. A letter of pre-qualification will not allow you to make an offer on a property. It is not a commitment to lend.
Loan pre-approval is one step beyond pre-qualification. Pre-approval involves a review of your credit report and verifications that include employment and income stability, your mortgage and rental history. We also verify your source of funds to close the real estate transaction. We compile those documents to determine the ability to repay the loan. A pre-approval letter will then be issued by a loan officer. A real estate professional will take you through the process of an earnest money agreement, and you will present an offer to the seller of the property and begin negotiations. When you have agreed on a sale price, The Real Estate Agent will refer you back to the Bank with the offer and the bank will order your home inspection to see if there are any defects in the property. If there are defects, the Real Estate Agent will then write an addendum to the real estate contract to fix such repairs. The repairs will be negotiated between the buyer and seller.
A Real Estate appraiser will determine the value of the property. The appraiser will comment on visible defects on the property. If the appraiser comments on these defects, they become a Bank required repair. The appraiser is hired by the bank and plays a very important role for both parties. His responsibility is to protect the bank and buyers shared interest in the property. The home inspector is an option for the buyer. The appraiser in some cases may call for a home inspection if he sees various defects in the property.
Once we have determined the value of the property and all the mentioned repairs are completed. We will perform a final underwritten review to qualify the property and the borrower for the loan.
We will then lock your interest rate and your loan documents will be forwarded to a Title and Escrow company. In which the loan funds will exchange hands between the Bank, seller and the buyer.