Frequently Asked Questions
What is the difference between prequalified and
Prequalification is a determination of your probable ability to obtain a loan. To
become prequalified, meet with a loan officer or mortgage company. They will help
you determine the price you can afford, based on your monthly income and your current
debts, as well as the cash you have for a down payment.
Preapproval means that the mortgage lender has already verified and approved your
credit and employment. Obtaining preapproval early in the process will make your
offer more attractive to the seller. Being preapproved is increasingly essential in
the Seattle real estate market.
What is earnest money?
Earnest money is a "good faith" deposit submitted with your offer to show the sellers
that you are serious about purchasing their home. Earnest money is a required part
of an offer. There is no set amount that is required, but the amount sometimes makes a
difference in the negotiation process. The earnest money is part of the purchase, and
will show as a credit to the buyers on the settlement statement drawn up by the escrow
What are closing costs?
Closing costs are charges paid to various entities during the real estate transaction.
They can include escrow fees, document preparation fees, cost of an inspection and lender
fees, including title insurance, credit report and appraisal costs.
What is a point?
A point is equal to one percent of the loan principal. At closing, some lenders charge points,
in addition to interest and fees.