Pre-Approved – This term has sadly been thrown about in the credit industry. Have you ever gotten a piece of mail saying you’re pre-approved for a card when you’ve never given your information to the company? Many times they’re junk mail pieces, or everyone is “pre-approved,” but your interest rate will be astronomical instead of ever being denied. The mortgage industry, however, does not play games. At least they don’t anymore. When you’re pre-approved for a loan, it means you need to submit your proof of income, reports of your finances and they will most certainly be running your credit score. Being pre-approved should also not be mistaken with being “pre-qualified,” since pre-qualifying is an incredibly quick and easy process that simply gives you a price range that you may be able to qualify for. Many times you simply tell the mortgage broker how much you make and any major debts you have and they calculate a number based on those numbers alone—no proof is required. It’s important to know the difference between pre-approval and being pre-qualified since being pre-qualified for a loan can help strengthen your offer, since sellers know you’ve already done half the work to obtain your loan (and that there haven’t been any glaring red flags so far that would keep you from being fully qualified).

Earnest Money Deposit – An earnest money deposit is just that; money to show that you are serious about the property. Often times people just refer to earnest money deposits as a deposit, but they are typically a 1-3% deposit on the price of the Denver Colorado homes for sale that shows that you plan on buying the property. This money is refundable if the property is not purchased and the reason is covered by a contingency in the contract. If the buyer decides to back out at the last minute, however, this deposit is given to the seller for their time wasted in the ordeal.

Addendums – Addendums are additions to a completed written document. These proposed changes to the contract need to be signed and agreed upon separately and overrule the original contract. These addenda can be anything from which items will be included in the sale of the home, the terms of financing by the seller (if they plan on financing the deal), disclosures, and anything else that adds legal stipulations to the contract.

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