Pre qual prequalify letter
Your Third Article
By Jim Pendleton -Mr MortgageTM
Pre qual prequalify letter is something this site highlights with Pre qual prequalify letter being
needed by everyone before going house hunting.
This article is not about pre qual prequalify letter, it is about how mortgage programs work.
Just the other day, I had a lively discussion with one of my clients who is buying a
property with his girlfriend. Due to various circumstances, we have determined that it is in their best
interests to apply for the loan in only his name. He was told by his attorney that he wants to have his
girlfriend the deed but not the mortgage.
One thing pre qual prequalify letter I realized as a result of this discussion
was that few people truly understand the inner workings of purchasing and financing a home. So, I thought I
would take a few lines to define and explain the three primary documents in a real estate transaction and
their purpose also get a pre qual prequalify letter.
The first document is called a deed. This is the document that is signed at a the
closing of a real estate transaction that conveys, or delivers, ownership rights from the current owners to
the new owners. This document serves as proof that the ownership rights have transfered from one set of
parties to another and is typically recorded in the local registry of deeds. By doing a little on-line
research, you can locate all the recorded deeds in the Registry’s files and learn who all the previous owners
of you property are.
The second document is a Note. It is essentially the agreement between the lender and
the buyer/borrower which documents how much money is going to be borrowed, at what rate, for what length of
time and any other terms that are appropriate. In the case of my client, this is actually the document that
we do not want his wife to be a part of. It is the legal document that obligates the parties to perform, or
payback the loan according the agreed upon terms. It is also the document that establishes the debt and who
is responsible to pay back the debt. Therefore, the lender only wants well qualified borrowers as parties to
this agreement. Basically, when you submit a loan application, you are applying to be a party to this
The final document is called a Mortgage. Despite the common expression of applying for
a mortgage you are really applying for a Note. The mortgage is your agreement to give-up your ownership
rights and allow the lender to foreclose, or sell, the property to recover their money if you do not make the
promised payments. It is called a security document and actually has value that is used to collateralize, or
back up, your loan. Most, if not all lenders will require that all new owners on the deed also sign the
mortgage acknowledging their agreement to give up their ownership rights in the event of foreclosure. This
way, no one with ownership rights can impede the foreclosure process.
To make a long explanation slightly less long. The deed documents ownership rights.
The note is the agreement to lend and payback some amount of money. And, the mortgage, is the owners
agreement to give up their rights to the property, should then not perform according to the terms of the
So, getting back to my clients, although I am not a lawyer and not qualified to give
legal advice, I suggested that we consider having both parties on the deed so their rights/interests as
owners are established and protected. If they were married in Massachusetts, then this would not be as big of
an issue as husbands and wives have joint interests in real property regardless of the deed. We would apply
for the loan in just his name and he would sign the note as an individual. Then, at the closing both of them
would be required to sign the mortgage. In this way all the parties interests are protected and the lender is
willing to make the loan, and get your own Pre qual prequalify letter.
It's as easy as that!