Question

Matt is considering the purchase of a condo on a mortgage. However, he is not sure on the amount of mortgage he is eligible for. _________ will help him identify and correct any problems on credit report errors that may arise on his application.

Answer 1

Answer:

Prequalification

Explanation:

If we refer back to the question, for the buyer to be able to know if he qualifies or the amount of mortgage he is eligible for, he will have to undergo a Prequalification process.

The prequalification process avails the buyer the necessary information in respect to the actual mortgage amounts he is eligible for.

The prequalification process also reveals the financial history of Matt such that it display an overview of Matt credit history and if Matt has the capacity to purchase mortgage on the desired property.

Answer 2

Answer:

A. Prequalification

Explanation:

First, the Options to the Question

a. Prequalification

b. A contingency clause

c. A Multiple Listing Service

d. Due diligence

What is a PreQualification in Mortgage Processing

Because most persons who are interested in buying a home do not have hundreds of thousands of dollars in cash to purchase the home of their dreams, the concept of mortgage is to approach a lender who will then advance the needed sum for the purchase and then the borrower will pay the advanced sum over some time (most times up to 30 years) at an interest rate.

A PreQualification is a process through which the lender evaluates the creditworthiness of the borrower and also decide the amount of loan the borrower is entitled to. This is done through the financial documents and records made available to the lender by the borrower

One important takeaway from a prequalification is that it is an approximation of what a borrower is entitled to base solely on the information given to the lender. It is, therefore, an approximation which can be less or more when the official application for the loan is submitted.

As stated in the question, getting a prequalification helps Matt to identify and understand the areas of problems and credit report errors that may arise and then he can use the prequalification information to attend to these errors and ensure a proper application is submitted that will allow him to maximise the amount of loan that can be made available to him.

Once Matt has corrected errors and identified problems that may arise on his mortgage application, he then gathers the relevant document and goes for the first formal process in mortgage processing which is the preapproval.