Want to know the secret of how to get a mortgage fast? Speed sometimes becomes essential in the home-buying game. I know, because I’m a real estate agent who’s seen clients in this position—and in addition, I know from personal experience.
Four years ago, I wasn’t even house shopping when I stumbled across my dream home, out of the blue. The way it happened was that I’d offered to hold an open house for a work colleague’s real estate listing: a two-story, two-bedroom condo that had just been remodeled from top to bottom.
When I walked through the front door, I was smitten with the gleaming new hardwood floors and open floor plan. I wanted the place for myself, and knew I had to make an offer quickly. The problem, though, was that I had to get pre-approved for a mortgage first.
Here’s the short version of what happened next: I called a mortgage lender I’d worked with closely on a number of real estate transactions in the past. I informed him that I was in a major rush, and begged him to push through my applications as soon as possible.
The next day, it was done: I had my mortgage—and my house—in 24 hours.
How to get a mortgage fast: Rocket isn’t your only option
Assume my speedy pre-approval was a fluke? Hardly. Quicken Loan’s Rocket Mortgage, for instance, has claimed for years that it can approve a loan in as little as eight minutes.
And a growing number of mortgage lenders are stepping up the pace, offering rapid pre-approval to home buyers—some within 24 hours of a borrower submitting an application, says Keith Gumbinger, vice president at HSH.com, a mortgage information website.
“Online-only lenders like Rocket showed this could be done, and now we’re seeing many mortgage lenders taking steps to keep up,” he says.
Example: In simple cases, Bank of America’s electronic system can give an applicant pre-approval within 24 hours, says John Schleck, senior vice president of sales at the lender.
Nonetheless, “Just because you can get a mortgage more quickly doesn’t necessarily mean it’s the best mortgage for you,” Gumbinger points out. “Speed and convenience can be valuable, but you still have to research the mortgage market and shop around.”
Looking to get a mortgage fast? Here are four things you need to know.
1. Understand the difference between pre-approval and pre-qualification
“Home sellers want a solid pre-approval from a buyer when they’re considering an offer,” says Rick Bechtel, head of U.S. Mortgage Banking at TD Bank. “They don’t want a buyer who has only been pre-qualified by a mortgage lender.” This begs the question: What’s the difference between mortgage pre-approval and pre-qualification?
In a nutshell, mortgage pre-approval is a commitment from a lender to provide you with home financing up to a certain loan amount. In order for a lender to issue pre-approval, an underwriter must do a full review of your income, assets, and credit. That’s a significantly more intensive process than mortgage pre-qualification, where a lender basically takes your word that your finances and credit score are what you say they are, without verifying any information.
Although both pre-qualification and pre-approval are intended to give a seller confidence that you’ll be able to obtain a mortgage, a pre-approval carries more weight, because it’s based on actual proof, Bechtel says.
Indeed, when you get pre-approved, you’ll receive a pre-approval letter on your lender’s letterhead that specifies the loan amount you’re qualified for. (Note: The letter will usually state that the loan is subject to the property you choose, verification of your financials at the time of purchase, and any other lender requirements.) Submitting this letter to a home seller when you make an offer will strengthen your bid.
Still, Bechtel offers a stern warning to home buyers: “If you get ‘pre-approved’ within minutes of submitting a mortgage application, make sure you’ve actually been pre-approved and not pre-qualified.”
2. Have your paperwork ready
Gathering your loan application documents and having them ready to upload electronically is the “most important thing borrowers can do to speed up the mortgage pre-approval process,” says PNC Bank mortgage executive Pete Boomer.
In general, the paperwork you’ll need to assemble for your lender includes the following:
- Pay stubs from the past 30 days showing your year-to-date income
- Two years of federal tax returns
- Two years of W-2 forms from your employer
- 60 days or a quarterly statement of all of your asset accounts, which include your checking and savings, as well as any investment accounts such as CDs, IRAs, and other stocks or bonds
- Any other current real estate holdings
- Residential history for the past two years, including landlord contact information if you rented
3. Be prepared to answer questions from an underwriter
“Pre-approval can still be a rigorous, time-consuming process for many home buyers, especially if their financial situation has some complexity to it,” Bechtel says. Read: If Mom and Dad are helping with your down payment, or you recently changed jobs, or you just got divorced, you may not be able to get pre-approved in a rapid fashion.
Boomer agrees: “I’ve seen pre-approval offered in as little as 24 hours, but I’ve also seen it take as long as two weeks.”
4. Don’t let your mortgage pre-approval expire
Reality check: After getting pre-approved, it may still take you a while to find a home and go under contract—especially if you’re shopping in a hot market where you’re fighting multiple offers on properties. However, mortgage pre-approval is typically good for only up to 90 days.
The reason pre-approval letters “expire” is because banks need the most up-to-date information about your salary, assets, and debts. Three or four months is long enough for you to have left a job, taken on new debts, or spent what was previously in your bank account.
In the event that you aren’t able to close on a home purchase by the time your pre-approval expires, your lender may offer you an extension of your pre-approval; however, the lender will have an underwriter perform another evaluation of your income, credit score, and other key information to ensure there are no changes to your financial situation.
The drawbacks of getting a mortgage fast
Although speedy mortgages are becoming more common, getting one may mean that you forfeit the right to shop around to find the lowest interest rate and best mortgage terms for you. So, if you’re not in a rush, don’t. You might benefit from taking your time to meet with at least three lenders and compare and contrast what they have to offer.
Need to get pre-approved for a loan? Shop around and learn more at realtor.com’s Mortgage Center.
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