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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-qualification letter. Pre-approval
includes the steps of a full approval, except for items such
as 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:
1.
Calculate the
total cost of the refinance
2. Calculate
the monthly savings
3. 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.
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.
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