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When I was ready to purchase last year, I requested full approval prior to starting my home search. My file DID go through underwriting which took approximately 3 weeks. Obviously they can’t give 100% approval until property has been placed under contract.
Once I found the home I wanted, I closed within 11 days. Had to move fast on inspection but bank sent appraiser out in 3 days which really helped.
Yes but think about that process on a grander scale. You don't sign a contract with a lender, you don't pay a retainer, you don't pay ANYTHING (except your appraisal fee to the Appraisal Management Company) until closing.
I've worked with so many clients who I educate and provide a dozen pre-approvals to over the course of months, just to have them shop me and disappear when they find a house.
The industry withstands that kind of thing with Loan Officers, but they can't sustain it with their salaried Processors and Underwriters. It's too much of a time-waste.
Movement Mortgage used to tout the notion that they did this, until they had to increase their rates and fees to the point that they lost traction in the market, and now they do things differently.
Just work with a good lender who will write that they have vetted Financials as well as credit, and who offers to speak with Listing Agents to assert confidence in their borrowers without disclosing confidential information.
Agents which help to find house insist that pre-approval is not enough these days - houses are sold in minutes, and to increase chances to get contract it is highly recommended to be not just pre-approved, but to obtain loan commitment from lender *prior* starting looking for house.
Don't believe anything a realtor tells you.
Sure, it's a good idea to get all your financial ducks in a row before looking for a house but the best way to do that is by making sure you can afford it and don't try to push the envelope, especially if your credit and finances are borderline.
I don't see how you would get a commitment letter prior to finding a home. You need the property address, you may need an appraisal and it will take 20 to 30 days to go thru underwriting to get a commitment letter.
I think the only way is to find a home at the price range you want or the highest you can afford. Apply for a commitment letter and when approved use it to view other properties.
I have lenders giving commitments on "to be determined" properties. Also in a hot market.
But it still would have to go thru underwriting which takes at least 20 days, so you could not use it for homes that sell the same day, All you could do is hold on to it and show the letter to future home owners that you got a commitment letter after the property was under contract.
Underwriting does not take 20 days. Initial underwrites are 24-72 hours depending on the lender. I have a great lender who underwrites same day.
I started doing this about 8 months, maybe a year now. We are in a very competitive market. People will do home inspections prior to submitting offers. It's not a lot of work to submit to UW and get a written loan commitment. When a buyer with one our commitments is making an offer, I call their agent and offer to call the listing agent. I tell them I will explain to the lister why this buyer's offer is different from the rest. Every agent has said yes, please make the call. I tell the lister if they look closely at my letter, they can see a loan commitment has been issued, with the primary conditions (commitment letters have too much personal information to be turned over to strangers).
It's been working - i would say around 2 to 2.5 dozen pre-approvals, almost all won the muti-bid competition and we weren't always the high price. No finance contingency, with exception of the appraisal speaks loudly. Listing agents I have never worked with have sent their buyers to me. After you lose a few bids, you will see the value of a pre-approval.
If you want to buy a house that fast, you have to pay cash. Every mortgage company is a bureaucracy!
Maybe for the big boxes or those dependent upon the major wholesalers, but there is efficiency beyond the Bank of Americas or Caliber Mortgages. Regional and portfolio lenders are having no issues with written loan commitments within 10 business days of application. Once received, those buyers can shop for the next 120 to go find their home (okay, 100 days because we just lost a few day with the approval). There is value in having your approval conditions known before even writing an offer. I work with a large contingent of Foreign Nationals and International Relocation Buyers and knowing those conditions means everything if documentation is oustside of the USA. US buyers are a piece of cake since the easing on UW.
Thanks everyone for your inputs, appreciate it. I decided to check with other mortgage specialists, and most probably go standard "just pre-approval" way. Let see how it works.
On further inspection I think you just posted part of an article from Zillow by some bored writer who wanted to write something to catch people's attention.
Get an agent. If they tell you that you need a commitment letter find another agent until you find one who doesn't tell you that. If they all tell you that you need it then find out what their process is.
No, I didn't posted anyone articles. I might be got the agent incorrectly, after I asked them additional questions it turned that it was not "load commitment" it was "Pre-Commitment" they were talking about. Though, I'm not quite sure what exactly "pre-commitment" means. I believe there are 3 stages only "pre-qualification", "pre-approval" and "loan-commitment". As they always referenced the process they suggested as "more advanced than pre-approval" I though they were talking about "loan-commitment", but now looks there is one more called "pre-commitment". I feel I should check with few other agents, and go with one who will suggest some standard, clear path.
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From a Florida mortgage broker
