Walk a Kb or Two in my Moccasins- Nobody 'splained it to me like that!

Simple answers to Complex Questions and Complex Answers to Simple Questions. In real life, I'm a Greater-Toronto (Canada) Realtor with RE/MAX Hallmark Realty Ltd, Brokerage. I first joined RE/MAX in 1983 and was first Registered to Trade in Real Estate in Ontario in 1974. Formerly known as "Two-Finger Ramblings of a Forensic Acuitant turned Community Synthesizer"

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Tuesday, September 14, 2010

What's a pre-Approved Mortgage?

Q......What's a pre-Approved Mortgage?
from Zoocasa Ask the Pros



A.....In fact there is no such thing.




The term should be "preliminarily-approved Principal amount for a preliminarily-approved Borrower" - you can see why is was shortened!



Mortgage ("dead" +"pledge") is a legal word referring to a loan registered on the title of real property (actually it is a transfer of the title to the lender, until the loan is fully paid).



Many standard-procedure legal and lawful rights, privileges, obligations and promises are built into the "word", which become effective once registration takes place.



But no one cares about that unless there's a problem with the payments, a default.



Just like a Marriage contract or the Canadian "BNA/Constitution" Acts everybody assumes they know all about it ... until there's a problem and all the "stuff you didn't know" comes to the surface.



Back to specifics:



A prospective Buyer "gets pre-approved" to establish the loan amount s/he could be granted if they purchased at X Price with Y down payment (and assuming everything on their preliminary application double-checks as accurate AND that nothing changes in their Income/expenses in the meantime)



Armed with the "Pre-Approval" Buyers, Registrants and Sellers work out Agmnts of Purchase and Sale at negotiated Prices and then the Lender plugs the specific property into the Lender's computerized "Underwriting Models" and ACTUALLY approves the Loan (subject to everything staying the same in the Buyers Income/Expenses til closing)

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