RE Finance: Chapter 2

The Nature of Real Estate Finance

pre-qualification

a quick estimate of what a buyer might afford; it is based on information the buyer tells the lender

pre-approval

a lender’s stronger promise that the buyer can borrow a certain amount; it is based on verified documents and a credit check

mortgage broker

a matchmaker who connects the borrower with a lender

mortgage banker

a mortgage company that makes loans using its own money or borrowed money

correspondent lender

a smaller lender that makes loans with its own money and takes the risk if the loan goes badly

origination

the beginning of a mortgage loan

loan processing

collecting the buyer’s application and financial information for the lender

underwriting

checking the borrower and the loan to decide whether the risk is acceptable

closing

the finish line, when everyone signs the documents and the mortgage money is released

funding

the lender sending the mortgage money to the title or escrow company

servicing

managing the loan after closing by collecting payments and keeping records