Mortgage Rate Hold
The Difference Between Rate Hold and Pre-Approval
A mortgage rate hold and mortgage pre-approval have one distinct difference. Both will hold the interest rate at a specific level for a designated amount of time (usually 90 days). But the rate hold does not guarantee that the lender will approve your request for financing at that rate.
The majority of mortgage lenders provide rate holds without any underwriting. Mortgage pre-approvals involve the underwriting of a file for the agreed-upon pre-approval rate.
When you inquire about a rate hold and get confirmation, but don’t have to submit all of the relevant docs, this means you got offered a rate hold.
A qualified mortgage broker will be happy to explain the difference between a rate hold and a mortgage pre-approval to you. And they will explain what this means for your home shopping power. Though a rate hold guarantees you a specific interest rate within a specific time frame, it only does so long as you meet all other necessary criteria.
A Potentially Wise Option
Discussing your mortgage lender requirements with your broker is a must. If you are satisfied that you will meet the financing requirements, a rate hold could be what you need.
If a rate hold isn’t the right way to go, apply for a mortgage pre-approval. With the latter, you can be certain that the rate quote you get will apply to the mortgage that finances your home purchase.
A pre-approval may not be possible to obtain from all mortgage lenders. Some mortgage lenders only offer rate holds. Though a pre-approval in writing is ideal, in some cases a rate hold may be your only option.