What is a fully underwritten pre approval

When you’re ready to buy a new home, navigating the home loan process can seem overwhelming. Where do you start? Who’s involved? What’s the timeline? Pre-qualification is the start of the loan process and that starts when you submit your loan application. Then comes underwriting, which (hopefully) results in pre-approval. In this article, we’ll talk about what happens after you submit your application—underwriting, an early step in the home loan process.

What is underwriting?

After you apply for a loan and submit all your information, your loan goes to underwriting. There, an underwriter assigned to your loan application will determine how much risk the lender will assume if they loan you money for your home. They look at your credit, employment history, and savings, among other things. There are certain rules and guidelines that underwriters must be sure your information meets in order to determine your eligibility for a loan. As the underwriter reviews your loan application and documents, they may ask for clarification and/or missing documents. Be sure to get these documents back to your lender as soon as possible so that they can move forward with your loan application. As soon as they’ve verified that all your information fits the correct guidelines, your loan is considered pre-approved.

So, then what is upfront underwriting?

Ideally, you would get pre-qualified before you find your dream house. That way, when you go house hunting, you already know how much home you can afford. (This information also helps your agent guide you in the right direction.) So, it’ll go like this: first you get pre-qualified, find the perfect house, make an offer, and then go back to your lender with the exact price. But what if you go back to your lender having found your dream home and don’t get approved for as much as you were qualified for? Every once in a while, this happens after the lender looks more closely at your credit, assets, debt-to-income ratio, etc. This may also happen if the property you’re interested in has condo or HOA fees, which skew your debt-to-income ratio. That’s where upfront underwriting comes into play.

Upfront underwriting streamlines the home loan process for borrowers. It allows you to know exactly how much you qualify upfront, so there are no surprises when you find the home of your dreams.

With upfront underwriting, you get a conditional approval from your lender. Then, you take your conditional approval with you (not literally) to search for a home. The conditional approval will have the exact dollar amount you qualify for, so you’ll know exactly how much you can afford when you go home shopping. How is this possible? The underwriter reviews all your documentation to get pre-approved (just like in the traditional loan process), but they do it upfront — hence the name. This process is much quicker than traditional underwriting, which can sometimes take weeks of back-and-forth between you and your lender. With upfront underwriting, an underwriter can give you conditional approval in as little as a few hours. The conditional approval turns into a full approval once you find a property and some other things happen, like the home appraisal.

What information will the underwriter review?

Your lender will want to verify your income and employment history, your assets (savings, investments, etc.), and your credit history, among a few other things. These things show the lender how much of a risk it is to lend you a home loan. Besides having an underwriter tell you, you can roughly calculate how much you can afford before talking to a lender. How much are your housing payments now? Are you comfortable with how much you’re currently spending? Decide ahead of time and remember that you don’t have to borrow the full amount you qualify for. In addition, your lender and agent should be able to answer any home buying or home loan questions you may have along the way.

A pre-approval is not a guarantee of a final loan approval. Any material change to credit worthiness, employment status, or financial position may impact final loan approval. All loans subject to satisfactory appraisal, clear property title, and final credit approval.

Looking to stand out from the buying crowd and land the perfect home? Instantly distance yourself with an underwritten letter of pre-approval.

Pre-approval is a game-changer. It shows sellers you mean business. You’ve done your research, you know your budget and you’re ready to plunk down some serious cash on a brand-new home. But what exactly is pre-approval and how can it give you a leg up?

Do you already know that you want to show sellers and agents that you’re ready to buy now? Get started with PowerBid from Guaranteed Rate and get pre-approved fast!

Pre-approval 101

To get pre-approved, you’ll complete an official mortgage application and supply your lender with the necessary documentation to perform an extensive check on your financial background and current credit rating. At this stage, you will most likely not have found a home yet, but you can leave blank any references to “property” on your application.

The basic formula of pre-approval remains the same from lender to lender. A lender reviews your credit report and financial information to determine your approved loan amount. Once the process is complete, your lender can disclose your specific mortgage amount. This can help you pin down your interest rate, and in some cases, you might even be able to lock in a specific rate!

Real approval*

Guaranteed Rate’s Digital Mortgage takes the pre-approval process to the next level with an automated underwriting of your loan file in minutes, not days. We call it PowerBid Approval. Benefits of pre-approval with automated underwriting:

• You narrow down your search with an accurate price range.
• Real estate agents and sellers know you’re ready to buy—NOW.
• You can make an offer on the spot when you find your dream home.
• Your offer is stronger than a pre-approval with no automated underwriting.

But don’t just take our word for it—agents can attest to the pre-approval difference:

“Guaranteed Rate’s reputation for supplying pre-approval carries a lot of weight with me. I know they can deliver and deliver with speed. I had a deal with a major lender and it was going on two months, so I sent it to Guaranteed Rate. They got it done in two weeks.” 
 -Melissa D., @properties

Final approval

Keep in mind—you still need final approval to close on your home. This can happen once all the underwriter’s requests are approved and a Clear to Close (CTC) is issued.

Summer is peak homebuying season and the competition can be stiff. Play chess while other homebuyers are stuck playing checkers: pre-approval can put you on the fast-track to home ownership. Happy house hunting!

Disclaimer

PowerBid Approval (the “Approval”) is contingent upon receipt of executed sales contract, an acceptable appraisal supporting value, valid hazard insurance policy, and a re-review of your financial condition. Guaranteed Rate, Inc. reserves the right to revoke this Approval at any time if there is a change in your financial condition or credit history which would impair your ability to repay this obligation and/or if any information contained your application is untrue, incomplete or inaccurate. Receipt of an application does not represent an approval for financing or interest rate guarantee. Not all applicants will be approved for financing. Restrictions may apply, contact Guaranteed Rate for current rates and for more information.

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