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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-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:
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Calculate the total cost of the refinance
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Calculate the monthly savings
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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.
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