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In the good old days, pre-mortgage crisis, you could get a fully underwritten mortgage approval the same day.
In fact, if you submit a complete loan package that same morning, you could be approved for a mortgage by noon. In 2004-2007, it was basically the norm.
Then things got very slow. And the process changed a lot. Gone were the same day approvals and in their place came long waiting periods. We’re talking weeks just to get approved for a mortgage.
Instead of being quickly given a conditional loan approval that requires a number of items to be delivered after the fact, lenders begin collecting a lot of documentation in order to get a clean loan package right from the start.
The logic was good – once all the numbers are verified why rush the approval when it turns out that the borrower is not really eligible? This can prove to be a huge waste of time for the mortgage underwriter.
Conversely, waiting weeks for a buyer to show a seller that they qualify to buy their home is also problematic.
guaranteed rate same day mortgage
- Chicago-based lender launches a new accelerated underwriting initiative
- Also known as a guaranteed rate same day mortgage
- Can generate “Final Approval” in just 1 working day
- Home buyers who provide requested documents within 8 hours are also eligible for a $250 lender credit
It looks like things are moving again in the mortgage industry. certainly nothing to do with the applications being their lowest point since 1995,
Jokes aside, the move is aimed at leveling the playing field for all-cash home buyers and those needing a mortgage to buy a home.
This was especially important during the seller’s market that we experienced over the past few years. Maybe not so much today.
But there will always be situations where speed matters, especially in real estate.
That brings us to the new “same day mortgage” initiative from Chicago-based direct lender Guaranteed Rate.
The company first launched it to a select group of customers in 2022, raising about $1.1 billion in funding in the process.
Now, same day mortgage has been implemented all over the country. This includes more eligible loan types, including both home purchase loans and refinances, and loans with loans as low as 3%.
Apparently, 72% of the company’s tailored (non-jumbo) business qualifies for the program.
In short, it allows you to get a “Clear to Close Loan Commitment” (“CTC”) within 1 business day.
how does same day mortgage work
First, you create an account on the Guaranteed Rate website, fill out the loan application, and electronically sign the initial application package.
They will pull your credit report (verify your credit score) to determine creditworthiness.
You will then need to provide certain financial documents for the guaranteed rate within 8 hours of locking the rate. It’s not clear whether you really have to lock upfront.
An underwriter will then review your income, assets and credit. Once approved, they will provide clear to full loan commitment within 1 working day.
It should be noted that documents provided after 1 PM local time, on weekends, or on company holidays will be submitted the next business day.
Once you receive your loan commitment, Guaranteed Rate says you have the ability to close your loan within 10 days.
However, CTC is still subject to “certain underwriting conditions,” including no loss of clear title and valuation exemptions. Other unnamed issues may also come into play.
To that end, the property must be eligible for assessment exemptions and the borrower must opt-in to AccountCheck, which automates income and asset verification.
Not all loans are eligible for same day mortgages
Note that the guaranteed rate is limited to same day mortgage conventional and conforming mortgage loans.
In other words, FHA, VA and USDA loans, like jumbo loans, are excluded.
Additionally, the loan must be used to purchase or refinance the primary residence of a single-family home or planned unit development (PUD) property. So it appears that condos are also excluded.
Unfortunately, and expectedly, loans with the self-employed borrower and co-borrower are also not eligible.
Program not available in all states (except KY, NY Co-Op/CEMA, WV, and TX Refi).
As you can see, mortgages can be underwritten faster when the credit landscape is less complex.
The good news is that most transactions involve W-2 borrowers purchasing single-family homes with loans backed by Fannie Mae and Freddie Mac.
This is still not the final loan approval
- It should be pointed out that despite the quick turnaround
- This is not a final loan approval, nor is it a guarantee of funds
- There will still be conditions that must be met to actually close your loan
- Any change in the financial status of the customer (employment, credit history, etc.) may void the loan approval
While this new guaranteed rate service is a big step forward, it has its limitations.
And you’ve got to play your part to get it RealFast loan approval.
Hence there is an additional burden for the borrowers to get their ducks in a row and present the complete loan package. This is not magic.
As mentioned, these approvals are conditional and do not guarantee closure. Things can and do happen after the fact that can jeopardize a mortgage pre-approval.
For example, if you are unable to provide certain supporting documents, or clarify the issues raised by the underwriter, it may lead to loan denial.
Other things may be discovered during the loan process that could sink a loan application, such as an unexpected drop in credit score or unusual bank deposits.
Then there is the mortgage rate environment, which changes daily. If you were borderline approved, rising rates could put you out of affordability if there’s a particularly bad swing and you haven’t locked in.
At the end of the day, from the time until your loan is actually paid off, a lot can go wrong. But I think this is true no matter where you apply.
So a guaranteed rate same day mortgage gives you the advantage of getting stronger conditional approval faster, which can help you get the home of your dreams.
Just remember that you’ll need to hold up your end of the bargain, and be diligent about getting things like bank statements and tax returns to the lender quickly.
Wherever you apply for a home loan, it’s a good rule of thumb – if you’re on top of things and easy to work with, you should get across the finish line faster.
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