Finance
An Alaska borrower who has been prequalified for a mortgage is:
AGuaranteed the loan amount stated in the prequalification
BProvided with a general estimate of borrowing capacity based on self-reported information, not a loan commitment✓ Correct
CApproved for financing contingent only on the appraisal
DIn the same position as a borrower who has been preapproved
Explanation
Prequalification is an informal estimate based on the borrower's self-reported information without verification. It is not a loan commitment.
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Key Terms to Know
Appraisal
A professional estimate of a property's market value prepared by a licensed or certified appraiser.
Pre-ApprovalA lender's conditional commitment to loan a specific amount to a borrower, based on verified income, credit, and assets.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
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