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Mortgage Rate Hold
The Difference Between Rate Hold and Mortgage Pre-Approval
A mortgage rate hold and mortgage pre-approval have one distinct difference. Though both hold an interest rate for a specified length of time – usually 90 days – 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, however, involve the underwriting of a file for the agreed upon pre-approval rate. If you haven't been asked to supply all relevant documentation regarding your home purchase, but have been given confirmation of a held best mortgage rate, you have most likely been 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 what this means for your home shopping power. Though a rate hold guarantees you a specific interest rate within a specific timeframe, it only does so pending you meet all other necessary criteria.
If you have discussed mortgage lender requirements with your mortgage broker and are satisfied that you will meet financing requirements, a rate hold may be all that you need while you house hunt. Otherwise, apply for mortgage pre-approval and be certain that the rate quote you receive will apply to the mortgage you use to finance 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 the rate hold may be your sole option.