PURCHASING

HOME PURCHASE FAQ'S

What is a prequalification?

A loan prequalification is an estimate of your borrowing power that is based on information you provide verbally to the lender.

What is a pre-approval?

A pre-approval is a preliminary approval issued by a lender after your income, asset and credit have been verified and deemed satisfactory for a given loan scenario. Typically a pre-approval is subject to receipt and review of a fully executed purchase and sale agreement, an appraisal for the property to be purchased and updated income, asset and credit documentation.

Should I get pre-approved?

In many markets obtaining a pre-approval letter from a lender shows you are serious about purchasing a property. In situations where more than one potential buyers submits an offer, buyers whose offer is accompanied by a pre-approval letter is deemed stronger than offers with a pre-qualification letter.

What are points?

Points are interest paid up front to obtain a lower interest rate. One point equals one percent of the loan amount.

Should I pay points?

You should consult with your lender to assess whether paying points to secure a lower rate or paying a larger down payment makes sense in the overall financial picture.

Are points deductible?

Whether points are deductible varies. If you are purchasing a home, the points may be tax deductible. In contrast, when you refinance, the points must be spread out for tax purposes. It is recommended that you consult your tax advisor.