Back in the good old days, pre-mortgage crisis, you could get a fully-underwritten mortgage approval the same day.
In fact, you could get approved for a mortgage by early afternoon if you submitted a complete loan package that same morning. In 2004-2007, this was basically the norm.
Then things slowed down a lot. And the process changed considerably. Gone were the same-day approvals and in their place came long waiting periods. We’re talking weeks to simply get approved for a mortgage.
Instead of quickly being given a conditional loan approval that required many items to be delivered after the fact, lenders began collecting lots of documentation upfront to get a squeaky-clean loan package from the start.
The logic was sound – why rush out an approval if it turns out the borrower isn’t truly qualified once all the numbers are verified? It could prove to be a big waste of the mortgage underwriter’s time.
Conversely, making a buyer wait weeks to show a seller they’re qualified to buy their home is also problematic.
Guaranteed Rate Same Day Mortgage
- Chicago-based lender has launched a new expedited underwriting initiative
- Known as Guaranteed Rate Same Day Mortgage
- Can generate a “final approval” in just 1 business day
- Home buyers who provide requested docs within 8 hours also eligible for a $250 lender credit
It seems things are shifting back to speed again in the mortgage industry. Surely nothing to do with applications being at their lowest point since 1995.
Jokes aside, the move is intended to level the playing field for all-cash home buyers and those who need a mortgage to buy a home.
This was especially important during the seller’s market we experienced the past few years. Today, maybe not as much.
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, funding about $1.1 billion in the process.
Now, Same Day Mortgage has been rolled out nationwide. It features more eligible loan types, including both home purchase loans and refinances, and loans with as little as 3% down.
Apparently, 72% of the company’s conforming (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 Same Day Mortgage Works
First, you create an account on the Guaranteed Rate website, fill out a loan application, and electronically sign the initial application package.
They will pull your credit report to determine creditworthiness (verify your credit scores).
Then you must provide certain financial documentation to Guaranteed Rate within 8 hours of locking a rate. It’s unclear if you actually have to lock upfront.
An underwriter will then review your income, assets, and credit. If approved, they’ll provide a Clear to Close loan commitment within 1 business day.
It should be noted that documents provided after 1pm local time, on a weekend, or on a company holiday will be considered submitted the next business day.
Once you receive your loan commitment, Guaranteed Rate says you have the ability to close your loan in as few as 10 days.
However, the CTC is still subject to “certain underwriting conditions,” including clear title and no loss of an appraisal waiver. Other unnamed issues may also come into play.
To that end, the property must be eligible for an appraisal waiver and the borrower must opt-in to AccountChek, which automates income and asset verification.
Not All Loans Are Eligible for Same Day Mortgage
Note that Guaranteed Rate Same Day Mortgage is limited to conventional and conforming mortgage loans only.
In other words, FHA, VA, and USDA loans are excluded, as are jumbo loans.
Additionally, the loan must be used for the purchase or refinance a primary residence for a single family home or planned unit development (PUD) property. So it appears condos are also excluded.
Unfortunately, and expectedly, self-employed borrowers and loans with co-borrowers are also not eligible.
The program is not available in all states (excludes KY, NY Co-Op/CEMA, WV, and TX Refi).
As you can see, mortgages can be underwritten quicker when the loan scenario is less complicated.
The good news is most transactions do involve W-2 borrowers purchasing single-family homes with loans backed by Fannie Mae and Freddie Mac.
It’s Still Not a Final Loan Approval
- It should be pointed out that despite the quick turnaround
- This is not a final loan approval, nor is it guaranteed to fund
- There will still be conditions that must be met to actually close your loan
- Any changes to a customer’s financial condition (employment, credit history, etc.) may nullify loan approval
While this new service from Guaranteed Rate is a great step forward, it still has its limitations.
And you need to play your part to get this real, fast loan approval.
So there is additional burden for borrowers to get their ducks in a row and present a full loan package. It’s not magic.
As noted, these approvals are conditional and not guaranteed to close. Things can and do happen after the fact that can jeopardize a mortgage pre-approval.
For example, if you’re unable to provide certain supporting documents, or clarify issues brought up by the underwriter, it could lead to a loan denial.
Other things may be discovered throughout the loan process that could sink a loan application, such as an unexpected drop in credit score or an unusual bank deposit.
Then there’s the mortgage rate environment, which changes daily. If you were borderline approved, rising rates could push you out of affordability if there’s a particularly bad swing and you didn’t lock.
End of the day, until your loan actually funds, plenty can go wrong. But I suppose that’s true no matter where you apply.
So the Guaranteed Rate Same Day Mortgage does give you the advantage of getting a more robust conditional approval in hand quickly, which could help you land your dream home.
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.
This is a good rule of thumb wherever you apply for a home loan – if you’re on top of things and easy to work with, you should get to the finish line faster.
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