Preapprovals have been a great benefit to everyone in the home buying process. After all, they give buyers, their real estate agents and sellers the confidence that they can make or accept offers and know exactly how much the buyer can spend. But there’s a problem.
Not all preapprovals are created equal. Sometimes they mean a borrower’s income and assets have been verified. Other times, lenders just pull credit and ask for estimates of income and assets. Frankly, the whole process can use a little more clarity, so we made some changes.
The result is a new system of approvals we call the Power Buying Process™. As part of that, we also have a completely new offering that will give your clients an advantage during the home shopping process, but we’ll talk about RateShield™ Approvals* in a minute.
Before we get there, let’s go over the difference between a Prequalified Approval and a Verified Approval.
A Prequalified Approval occurs when a client’s credit is pulled in order to look at their three-digit FICO® Score and report. In addition to viewing the score, we also look at their installment and revolving debt.
This is compared against the client’s estimates of their income and assets in order to come up with their debt-to-income (DTI) ratio.
Since these are just estimates, a Prequalified Approval is just a guideline that will give a client an idea of how much they can afford. When possible, we encourage our clients to get a Verified Approval.
A Verified Approval takes things one step further than a Prequalified Approval by having clients verify their income and assets.
We do this by collecting their documents like pay stubs, W-2s, tax returns and bank statements. This enables us to calculate exactly how much the client can afford with certainty.
We understand the home buying process moves quickly. In order to keep up with the speed, we guarantee that our underwriters will have reviewed your clients’ documents within 24 hours of submission.
You and your clients should feel confident in their approval. We’re so confident that your client’s loan will close that if a client doesn’t close through no fault of your own after the Verified Approval review, we’ll give them $1,000.**
Being able to afford a home is just one piece of the puzzle. One of the other big concerns home buyers have is their interest rate. When should they float and when should they lock their rate? Even if they like the rates they see right now, they typically have to find a house before they can lock their rate. This causes a fair amount of uncertainty and anxiety for buyers.
Our RateShield Approval aims to help with that. It’s a Verified Approval, but with the added bonus that the client can lock their rate for up to 90 days while searching for a home. If rates are lower when they find the property and give us the address, we lower them down to the current market interest rate. If rates have risen, they keep the one they have. Either way, they get the lower rate – it’s a win-win scenario!
This enables clients to protect their monthly payment because once it’s locked for that 90-day period, the rate won’t increase while your clients shop. Because it also offers all the advantages of a Verified Approval, their offer has the strength of a cash buyer because they’ve been fully approved for financing.
As long as they find their property within 90 days, the rate remains locked at that point so that they have time to complete the process and close on the loan.
Your clients can take advantage of our Power Buying Process by getting started online with Rocket Mortgage® by Quicken Loans. One of our Home Loan Experts can also help go over your clients’ options at (888) 980-2891.
For more real estate news and insights, check out our content for real estate professionals at RealEstate.QuickenLoans.com.
*RateShield Approval locks your client’s initial interest rate for up to 90 days on 30-year conventional, FHA and VA fixed-rate purchase loan products. Your client’s exact interest rate will depend on the date they lock their rate. Once your client submits their signed purchase agreement, we’ll compare their rate to our published rates for that date and re-lock their interest rate at the lower of the two rates for an additional 40 to 60 days. Additional conditions or exclusions may apply.
**Your client’s participation in the Verified Approval program is based on an underwriter’s comprehensive analysis of their credit, income, employment status, debt, property, insurance, appraisal and a satisfactory title report/search. If new information materially changes the underwriting decision resulting in a denial of the credit request, if the loan fails to close for a reason outside of Quicken Loans’ control, or if the client no longer wants to proceed with the loan, their participation in the program will be discontinued. If the client’s eligibility in the program does not change and their mortgage loan does not close, they will receive $1,000. This offer does not apply to new purchase loans submitted to Quicken Loans through a mortgage broker. Additional conditions or exclusions may apply. Verified Approval within 24 hours of receipt of all requested documentation.
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