What
is the difference between pre-approval and pre-qualification?
The
pre-approval process is much more complete than pre-qualification.
For pre-qualification, the loan officer asks you a few questions
and provides you with a pre-qual letter. Pre-approval includes all
the steps of a full approval, except for the appraisal and title
search. Pre-approval can put you in a better negotiating position,
much like a cash buyer.
When
does it make sense to refinance?
Usually people refinance to save money, either by obtaining
a lower interest rate or by reducing the term of the loan. Refinancing
is also a way to convert an adjustable loan to a fixed loan or
to consolidate debts. The decision to refinance can be difficult,
since there are several reasons to refinance. However, if you
are looking to save money, try this calculation:
-
Calculate the total cost of the refinance
-
Calculate the monthly savings
-
Divide the total cost of the refinance
(#1) by the monthly savings (#2). This is the "break
even" time. If you own the house longer than this, you
will save money by refinancing.
Since
refinancing is a complex topic, consult a mortgage professional.
What
is a rate lock?
A
rate lock is a contractual agreement between the lender and buyer.
There are four components to a rate lock: loan program, interest
rate, points, and the length of the lock.
