No doubt about it, this is a tricky environment for funding a new custom home or major renovation project.

One way to get ahead of the curve is to get a preapproval from a lender. A Preapproval is your lender’s written commitment to finance your home purchase up to a specific amount. Getting preapproved is a smart move for serious homebuyers in this volatile credit environment and it shows sellers that you come to the negotiating table ready to complete the transaction.
Preapproval vs. prequalification
A preapproval indicates that a lender has taken a detailed look into your financial background and has committed to lend you a certain amount of money, pending specific property details. Because preapproval includes a credit check, it’s more powerful than a prequalification letter, which generally only estimates what you can borrow based on information you’ve provided.

What are the advantages of being preapproved?
Preapproval offers a number of advantages over waiting to apply for a mortgage until after you’ve found a home. It lets you:

* Shop for a home with the confidence of knowing exactly how much you can borrow.
* Take advantage of the preference many home sellers have for preapproved buyers.
* Find out about possible qualification problems early in the homebuying process.
* Avoid the hectic rush to find the right mortgage loan at the same time that you’ve found a house.

Who can benefit the most from preapproval?
Preapproval is a great advantage for anyone buying a home in todays environment. A year ago it was especially useful for buyers looking for their first home and those who are self-employed or work on commission. But today, even those buyers that on the surface may seem to be credit worthy – high incomes and great credit scores, may be surprised what lenders are requiring as credit is becoming scarcer.

* First-time homebuyers. Without a record of previous mortgage payments, sellers may see first-time homebuyers as less likely to obtain financing than a similar buyer who’s already demonstrated the ability to meet a monthly mortgage payment. A preapproval helps even the field by showing the seller that a lender has already run the numbers and is willing to proceed with the transaction.
* Self-employed buyers or commissioned employees. Because their incomes may fluctuate more dramatically, self-employed and commissioned buyers often lack the financial documentation of salaried employees, which can send up a red flag to some sellers. Showing that a lender has already considered these factors will help mitigate this risk.

How does the process work?
Before you begin shopping for a home, submit your financial information to us. We’ll review your loan application and then, if you meet the qualification requirements, we’ll provide you with a written preapproval for a certain mortgage amount, down payment, and interest rate, subject to the terms of the commitment letter. The loan commitment letter can be finalized after information about the property, including an appraisal, is submitted.