Prequalification provides estimates of required down payment and closing costs of different types of mortgages. It identifies in advance any problems such as:
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A. B. C. D.A
The correct answer is A. Credit report errors.
Prequalification is a process that allows potential homebuyers to determine their eligibility for a mortgage loan and to estimate the amount of down payment and closing costs required for different types of mortgages. The prequalification process involves providing basic financial information, such as income, assets, and debts, to a lender or mortgage broker. The lender or broker then evaluates this information and provides an estimate of the maximum loan amount for which the homebuyer may be eligible, along with an estimate of the required down payment and closing costs.
During the prequalification process, the lender or broker will also obtain the homebuyer's credit report, which is a record of the individual's credit history, including information on any outstanding debts, payment history, and credit utilization. This credit report is used to assess the homebuyer's creditworthiness and ability to repay a mortgage loan.
One of the key benefits of the prequalification process is that it allows potential homebuyers to identify any errors or inaccuracies on their credit reports before they apply for a mortgage loan. These errors could include outdated or incorrect personal information, incorrect payment histories, or inaccurate account balances. Identifying and correcting these errors before applying for a mortgage loan can help to improve the homebuyer's credit score and increase their chances of being approved for a loan with favorable terms and interest rates.
In summary, prequalification provides estimates of required down payment and closing costs of different types of mortgages, and it also identifies in advance any problems with credit report errors that could affect a homebuyer's eligibility for a mortgage loan.