Your friend, the underwriter pre-approval

It can be tough being a buyer in today's market. There couldn't possibly be a way to gain a strong competitive advantage without paying an arm and a leg...could there?

  • 2 mins read
  • March 22, 2019

The truth is, price is only part of a strong offer on a property. Price opens the door and makes the seller consider you. But it’s actually terms that seal the deal and get you to closing.

The terms of a contract can touch any number of factors. They can include the closing date, inspection timeline, and even offering to cover for a low appraisal. But perhaps the biggest key ingredient for success is your financing. The seller you are interacting with wants to know that:

  • You’re serious and committed, and
  • Your financing won’t falter and tank the transaction, forcing them to start over.

In today’s market, it’s taken for granted that no seller will accept a financed offer without an attached letter of pre-approval from a reputable lender. In other words, a home lender stating that they have reviewed your finances, and are comfortable lending you a mortgage up to a certain amount. But not all pre-approvals are the same!

With a “normal” pre-approval, your entire loan application is still subject to approval by an underwriter at the mortgage company, prior to closing. The job of an underwriter is to evaluate the overall risk of giving you a home loan, as well as checking the overall application for errors, inconsistencies, or generally any areas for further questions. Even if you’re solid financially, there are always last-minute quirks that can demand more time and potentially hold up the transaction. No one likes being held up. Least of all sellers. So if you were a seller, wouldn’t you like it if someone offered to take that risk all away?

Enter the underwriter pre-approval! By going the extra mile and asking your lender to submit your loan application to an underwriter for review before getting pre-approved, you are basically guaranteeing the seller that not only are your finances solid, but that your application is virtually free of uncertainty. The only thing that can hold up the transaction at that point is the inspection or the appraisal – but not you, the borrower! As an added bonus, this generally means that you will close much sooner than with a typical pre-approval. Again, a major competitive advantage.

Requesting an underwriter pre-approval generally takes slightly longer than a regular pre-approval. But for the significant advantage you can achieve as a buyer – and the greater peace of mind that all parties can enjoy from it – it’s something everyone ought to at least consider. You really have nothing to lose.