Terms And Phrases To Learn Before House Hunting
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Prequalification letter
A prequalification letter is a letter from your mortgage lender that calculates roughly how much they will lend you and, in that sense, what properties you can be looking at. If a lender looks at your finances and comes up with a prequalification letter stating you will likely receive $400,000 from them, and you have $100,000 to put down, then you can be on the market checking out properties that cost $500,000 (maybe more, but you’d have to ask the seller to go below asking price). Keep in mind this letter is not a promise from the lender—it is just an estimate of what they’ll likely give you. They will still need to do an official deep dive into your finances, and appraise the property you find, before making you an official offer.
