Why it is important to get preapproved? Is preapproval the same as a ratehold?

Why it is important to get preapproved? Is preapproval the same as a ratehold?


Preapproval and ratehold are used interchangeably quite often but they can mean two very different things. It is dependent on how your mortgage broker manages them.
A true preapproval is complete when your income and down payment documents have been reviewed and your credit reviewed.


A ratehold is completed when the application is submitted to the lender. Sometimes, with rateholds, the income and down payment documents have not been reviewed.


Preapprovals with income and down payment documentation, have a much better chance of turning into an approval with the lender. It takes out the majority of the surprises in the deal. Part of our responsibilities as mortgage brokers is to review documents and look for any issues that might arise and to give advice on what is required in the documentation. There are even a few lenders that will actually underwrite the preapprovals which means they will review income and down payment docs upfront.


Being preapproved (correctly) will give you and your realtor the confidence to be looking in the correct range of purchase prices. It will alleviate wasting time looking at price ranges that are too high and reduce the stress at the time the offer has been submitted. Your documents for income and down payment will already have been collected and reviewed by the broker (and even perhaps the lender).


If you have been told that you have been preapproved but you have not provided any documents (income or down payment), then you need to ask what you need to provide in order to be confident that your income and down payment will be accepted.


If you need additional information on this topic, please feel free to reach out to me at 306.222.7900 or debm@mortgagegroup.com

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