Purchase With The Power Of RateShield®
Kevin Graham5-minute read
September 19, 2022
It’s an extremely competitive market out there right now. Home prices are up 19.1% in the last year, according to the latest data from Case-Shiller. If we look at the supply of existing homes in this country, at the current pace of sales, every home on the market would be sold within 1.7 months. For context, 6 months is considered normal. You might have to be more patient finding a home.
To make matters slightly more difficult, the average rate on a 30-year fixed mortgage is up almost a full percentage point as compared to the same time just last month, according to Freddie Mac.
If the deck seems stacked against home buyers, then we may be able to offer you an ace in the hole. RateShield allows you to lock your interest rate for up to 90 days while you’re shopping for a home.1 If rates fall while you’re shopping, you can lower your rate one time during this period. Take a breath and don’t rush your home buying process.
Understanding The Difference Between Approvals
When you’re shopping for a mortgage, you get a lot of terminology thrown at you and a lot of promises made by various lenders, but what does it all really mean if you’re looking for certainty in the home buying process?
We’ve broken down three levels of approval and why the combination of a Verified Approval and RateShield can benefit you.
With a Prequalified Approval, we do a hard credit pull, with your permission. This gives us a chance to see your three-digit FICO® Score as well as any existing revolving and installment debt payments you have.
You also verbally give us your income information and any savings you might want to use to help you get your home. Based on this information, a debt-to-income ratio (DTI) calculation is done to determine what you can afford.
While a Prequalified Approval could give you a good idea of what you can spend, it may not necessarily mean anything to sellers or real estate agents because nothing has been formally checked other than credit.
To really give yourself the confidence you need in a real estate transaction, it’s best to move forward with a Verified Approval.
The process is pretty straightforward. You share documentation with us, including items like your W-2s, tax returns, pay stubs and bank statements. A Home Loan Expert will be able to go over exactly what we need in your situation.
When you qualify for a Verified Approval, you can have the confidence you need when making an offer because we guarantee your loan will close as a result of our review or we'll pay you $1,000.
Finally, because everything is verified, sellers and their real estate agents can also have a high level of certainty that your loan will close. This can be a big advantage in a competitive market like the one we currently have.
A Verified Approval should take the qualification uncertainty out of things, but rates are also a concern for anyone in the market for a mortgage. Traditionally, you haven’t been able to lock your interest rate before you sign a purchase agreement. So if rates went up while you shopped, you were out of luck.
The key feature of RateShield is the fact that you have up to 90 days to shop for a home with a locked interest rate. If rates go down over that time frame, you'll be able to lower your rate one time. If they’ve gone up, you keep the rate you locked at the beginning of the process. This is referred to as a float down option. It’s a win-win.
RateShield also provides payment certainty. Once you lock your interest rate, your monthly payment won’t increase because of a higher interest rate.
Available on 30-year conventional, FHA and VA loans, RateShield offers all the qualification certainty of a Verified Approval along with the comfort of knowing that your interest rate is locked and can be lowered if rates move in your favor.
The Bottom Line
The combination of rising mortgage rates and elevated home prices makes it a challenging market for home buyers. However, a Verified Approval with RateShield can help you navigate this tough environment nimbly.
A Verified Approval allows you to have full confidence in how much you can afford by documenting your credit, income and assets. RateShield protects you from higher interest rates with a 90-day lock. If rates fall, you can float down your rate once.
Are you ready to give RateShield a shot? Get started online or give one of our Home Loan Experts a call at (833) 326-6018.
1 RateShield Approval is a Verified Approval with an interest rate lock for up to 90 days. If rates increase, your rate will stay the same for 90 days. If rates decrease, you will be able to lower your rate one time within 90 days. Please contact your Home Loan Expert for additional information. This offer is only valid on 30-year FHA, VA, and Conventional purchase loan products. Additional conditions and exclusions may apply.
2 Participation in the Verified Approval program is based on an underwriter’s comprehensive analysis of your credit, income, employment status, assets and debt. If new information materially changes the underwriting decision resulting in a denial of your credit request, if the loan fails to close for a reason outside of Rocket Mortgage’s control, including, but not limited to satisfactory insurance, appraisal and title report/search, or if you no longer want to proceed with the loan, your participation in the program will be discontinued. If your eligibility in the program does not change and your mortgage loan does not close due to a Rocket Mortgage error, you will receive the $1,000. This offer does not apply to new purchase loans submitted to Rocket Mortgage through a mortgage broker. This offer is not valid for self-employed clients. Rocket Mortgage reserves the right to cancel this offer at any time. Acceptance of this offer constitutes the acceptance of these terms and conditions, which are subject to change at the sole discretion of Rocket Mortgage. Additional conditions or exclusions may apply.
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