Being preapproved before you start your home search takes the guesswork out of the financing process and will prepare you to negotiate with confidence.

Q.

What is "Preapproval"?

A.

Generally speaking, "Preapproval" is the evaluation of verified income, credit and asset exhibits before you buy a 1-4 family residential property and apply for mortgage financing. There is no formal definition of "Preapproval" and there are differences between lenders as to the meaning and extent of a "Preapproval" commitment. A successful "Preapproval" application will typically result in a binding commitment from the lender to approve the prospective mortgage application for a specified amount provided you find an acceptable property, successfully negotiate with the seller(s), and comply with the terms and conditions otherwise noted in the "Preapproval" commitment letter.

Q.

Why get "Preapproved"?

A.

There are a number of benefits to "Preapproval". A "Preapproval" commitment provides you with the maximum mortgage amount, monthly payment and price range of the property you can afford. It also confirms your creditworthiness as a borrower and validates you as an approved, serious and motivated buyer to both sellers and real estate professionals. "Preapproval" often takes a great deal of uncertainty out of the process by uncovering whether or not there are any issues or concerns related to your ability to obtain financing. Armed with the reassurance as to your borrowing ability, you can proceed confidently into your home search and negotiations. Even if your credit or income profiles are not satisfactory, "Preapproval" helps you identify those areas that you need to address prior to buying a home.

Q.

Why should I get "Preapproved"?

A.

There are a number of benefits. First, it provides you with the maximum mortgage amount, monthly payment and price range of the property you can afford. Second, it confirms your creditworthiness as a borrower and validates you as an approved, serious and motivated buyer to both sellers and real estate professionals. Even if your credit or income profiles are not satisfactory, "Preapproval" helps you identify those areas that you need to address prior to buying a home. There is no drawback to applying for "Preapproval" consideration as there is no cost and no obligation involved.

Q.	Are there any reasons not to get "Preapproved"?
A.	No, there are no drawbacks to applying for "Preapproval" consideration even if your application is denied, unless the lender charges you a fee for the service.

Q.

Should I pay for "Preapproval" services?

A.

You should not have to. As will be discussed in the next section, most lenders will collect a non-refundable fee for "Preapproval" services from you at the time you complete your "Preapproval" application paperwork. They are collecting this fee for two purposes; first, to cover their costs of processing your request, secondly, and more importantly, to "capture" you for your ultimate mortgage application. Winter Hill Bank does not charge for "Preapproval" services as we believe that we should earn your trust and loyalty through our services not because of a financial commitment that you make.

Q.

I have heard of instances where an offer from a "Preapproved" buyer is accepted by a seller even when a competing offer at a higher price has been tendered by a non-"Preapproved" buyer. Is this true?

A.

It does happen on occasion. While a "Preapproval" commitment does not guarantee that your offer will be accepted, it does mean that your offer will be considered. If you are competing against many offers and the seller is motivated, one of the first questions that will be asked is whether the offer is backed by a "Preapproval" commitment. Those offers that are not backed by "Preapproval" commitments are often not considered. Real estate professionals are keen to the legitimacy that a "Preapproval" commitment bestows and will not fail to present this information in support of a buyer's offer.

Q.

Does it matter where I get "Preapproved"? Are "Preapproval" commitments from all lenders the same?

A.

As stated above, there are often vast differences between lenders with respect to the meaning of "Preapproval". Many mortgage providers, typically mortgage brokers and most mortgage companies but also some banks, are not direct lenders but simply originate and process loans for sale to third-party institutions. The industry term for this is "third-party originators". These originators are not authorized to make decisions on the acceptability of a borrower's mortgage request. They have to submit the appropriate income, credit and asset exhibits to the third party institution for the loan decision. Some of these mortgage providers will submit your exhibits to their third party outlets but most will not as they will have to pay a fee for "Preapproval" services. Regardless of whether they will submit your "Preapproval" request for consideration, they typically charge a fee for "Preapproval" services to both defray their costs of processing your request and to have you make a financial commitment to them in order to "capture" you for your ultimate mortgage application after you find a home. Secondly, differences also exist between mortgage lenders as to the extent of the verification process they will subject your "Preapproval" request. The more thorough the verification process, the greater the likelihood that your mortgage application will be approved. You can evaluate how thoroughly a lender has verified your borrowing capabilities and whether they are a direct lender or "third party originator" by the nature and scope of your "Preapproval" commitment conditions. A "Preapproval" commitment from a direct lender is evidence that an individual vested with loan approval authority has approved your "Preapproval" request.

Q.

What is the difference between "Preapproval" and "Prequalification?"

A.

As stated above, a "Preapproval" commitment is typically a binding approval on the part of the lender to make the mortgage based upon verified and confirmed information. "Prequalification" is an evaluation of one's borrowing capabilities based upon unverified or unconfirmed information. It is simply an opinion based upon representations given to the lender and does not consist of a commitment or approval.

Q.

How do I get started with the "Preapproval" process?

A.

Your cooperation and assistance is required. Below you will find a listing entitled "Preapproval Documentation Request Form". Please assemble the items that apply to your financial and credit profile and that of any other prospective co-borrower regardless of whether they plan to hold title or live in the property. The more thorough you are in compiling these items, the faster the decision on your "Preapproval" request. After collecting these items, simply call Winter Hill Bank at 800-444-4300 ext. 2286 to schedule a convenient time and place to meet to activate your "Preapproval" application. If you have any questions about "Preapproval" services, mortgage products, lending or deposit services, please do not hesitate to call.