What Is the Difference Between a Standard Preapproval and an Underwritten Preapproval?

A standard home mortgage preapproval can give you confidence when shopping for your new home, but if the market turns competitive, you want an extra edge to hold your ground against interlopers. Having your preapproval underwritten can give you that leg up and help a buyer in a tight spot make the easy choice to go with a clearly qualified buyer.

What’s a Standard Preapproval?

Your standard preapproval is pretty easy to complete. You’ll fill out the loan application, give your loan officer (LO) all of your documentation to support the information you provided, and give permission for your credit report to be pulled.

Your loan officer (LO), an LO assistant, or a loan processor will complete your preapproval by comparing your application to your documentation, verifying all of your debt and assets, Tand pulling your hard credit report. If they don’t find any red flags, you receive your preapproval letter.

What’s an Underwritten Preapproval

An underwritten preapproval goes from your LO’s hands to the underwriter for the full underwriting process. In a normal circumstance, this happens after you’ve found a home you want to make an offer on, but if the market is extremely competitive, you may want to get underwriting out of the way to strengthen your preapproval. 

The underwriter will review your entire file except property related items like the appraisal and title policy and insurance proof which you won’t have yet. Once they are finished, your loan is basically a sure thing as long as there are  no problems with the house and title and you get the necessary insurance. As soon as your offer is accepted, you can get started on the final steps in the home loan approval process..

Should I Get Underwritten?

In a non-competitive market you’ll usually only need a standard preapproval. You can go house hunting, and when you find a home you want to put an offer on, ask your LO to kick your file to underwriting. However, if the market is hot and/or you’ve found the right home already, go ahead and get underwritten to cement your place as the best candidate for a buyer. 

Sellers see offers with underwritten preapproval as a pretty much sure thing, since the chance of financing falling through at that point is slim to none. Sellers may also appreciate a faster closing option, especially if they need to sell fast due to a move or deployment. 

You also may wish to undergo underwriting from the start of your loan if your financial situation is unique and likely to come under scrutiny. Your LO can let you know if they think you could benefit from the peace of mind scrutiny and approval from underwriting can provide.