Rate Holds

Pre-Approval = Rate Hold

Pre-Approval is typically an auto generated ‘approval’ based on factors entered into the application.

There is no underwriting or human eyes on your application.

It generates a loan amount, and a rate. This rate is typically held for 120 days for you – if you qualify at the time of your mortgage application when you are fully underwritten, this rate is an available option.

Pre-Qualification is hands on, akin to a full mortgage application – underwriting upfront. It requires your documentation up front for a comprehensive underwriting of your income, downpayment and credit. Preventing surprises later.

Rate Hold is an insurance policy, a worse case (rate) scenario protection for 120 days.

Those lenders that do offer rate holds do NOT offer their best rates. Why?

1)        They cost lenders money to issue therefore not all lenders issue them.

a.        Overhead cost of issuing (technology and labor)

b.        Having to hold the funds aside that they’ve promised in a Rate Hold - whilst they’re being held they don’t earn interest.

2)        Mortgage money is available in three overarching categories – Uninsured, Insurable and Insured. Insurable has sub-categories defined by Loan to Value.

Rate holds are simplified and not offered in each (sub-)category.

Why do I still obtain a Rate Hold then?……just in case!

All rate holds I do are pre-qualified rate holds - doing our due diligence

When you have an Accepted Offer – there is zero obligation to use Rate Hold – that is when you can consider all (20+) lenders.

‘Fun’ Fact: less than 5% of Rate Holds actualize and become Mortgages!!