What is a TBD Underwritten Mortgage Approval?
A “TBD underwritten mortgage approval” is a fully underwritten loan commitment in which an underwriter provides conditional approval for a mortgage loan even before the borrower has chosen a property. With a TBD or “To Be Determined” underwritten mortgage approval, some of the most important transaction details, including the property address, appraisal, and sales price, are still unknown. At Mortgage Equity Partners, we refer to this as our Cash Ready Plus Buyer program, which was designed to make our Rhode Island borrowers just as competitive as cash buyers.
Why get pre-approved?
All real estate and mortgage professionals highly recommend that you get pre-approved before beginning the home search. Pre-approval involves a preliminary review of the borrower’s financial documents and credit history to determine the amount of mortgage they are likely to qualify for. After getting pre-approved, the borrower can start the home search, but when they find the property, they will need to provide additional documentation and begin the home loan process. Start the pre-approval process today!
With a TBD underwritten mortgage approval, all necessary financial documentation (income, assets, credit, etc.) has already been provided and reviewed by underwriting, even though the property details have not been finalized. The underwriter assesses the borrower’s financial situation and issues a conditional approval. The conditional approval includes specific conditions the borrower must meet to finalize the mortgage approval once they choose a property. These conditions may include providing additional documents, verifying employment, and satisfying any outstanding requirements. Once this is done, most of the heavy lifting has been done.
After pre-approval
After receiving conditional approval, the borrower can continue their home search and identify a property they wish to purchase. The final underwriting review occurs once they select a property and enter into a purchase agreement. The underwriting team will verify the property’s value through an appraisal and ensure that the borrower’s financial situation still meets lending guidelines. Once a “clear to close” is issued, the loan is ready to close, and the borrower can proceed with the purchase.
As you can see, a fully underwritten TBD mortgage approval is a loan commitment that provides a head start on the mortgage approval process and helps streamline the closing process once a property is chosen. Initially, a fully underwritten TBD mortgage approval may take longer than a traditional pre-approval or pre-qualification issued by a loan officer, but you are receiving a much more powerful document.
Why bother with TBD approval? It’s perfect for home shoppers who want a head start on the mortgage process or who want to compete with cash buyers by showing sellers they’re serious contenders with an underwritten loan approval.
Comparing pre-qualification, pre-approval, and TBD underwritten loan approval
The main difference is the level of verification and lender commitment. Pre-qualification is a simple review of income and asset information, pre-approval is a deep dive into your finances and review of your financial documents, and TBD approval is an underwritten loan commitment issued without a property address.
A TBD underwritten mortgage approval through our Cash Ready Buyer Plus program puts Rhode Island borrowers in a solid position to compete against other financed borrowers or cash buyers. The approval is valid for 90 days and can be used to make offers on multiple properties. If you are serious about buying a home in a competitive market, contact our knowledgeable loan officers to learn more about this program.
