How fast is fast enough? Ask Guaranteed Rate, which just launched “5 Minute Approval” for mortgage applications.
This new “innovation” from the Chicago-based mortgage lender allows borrowers to get approved for a home loan in just five minutes (or less).
Interestingly, it comes not long after their Same Day Mortgage, which apparently wasn’t quick enough for some.
It might also be a sign of the times, with mortgage application volume at its lowest levels since the 1990s.
As the name suggests, customers can get approved for a home loan in about five minutes and possibly close in just 10 days.
How Does This New 5 Minute Mortgage Approval Work?
Those who are in a really big rush to get a mortgage can now take advantage of Guaranteed Rate’s so-called 5 Minute Approval.
As noted, the company only just launched Same Day Mortgage back in March, but apparently they had their sights set on faster.
And faster is exactly what this is. How it works appears relatively simple.
You visit their website, access the secure portal, sign the initial application package, then upload any requested documents.
This can apparently be done without any human interaction as well, and is about three minutes faster than Rocket Mortgage’s 8-minute full approval launched back in 2015.
To date, Guaranteed Rate has “successfully approved” more than 100 loans within 5 minutes via their pilot program.
It’s unclear how much is needed from the borrower as they didn’t provide the details, but that obviously seems lightning fast.
Also not totally clear if this is a full loan approval or a more basic mortgage pre-approval.
Simply visiting a website and filling out a form can easily take five minutes, so my assumption is they aren’t asking for much here. It’s unclear if credit is pulled, but I’d guess at least a soft pull is required.
If document upload is needed, that would likely take several minutes to track down from other websites.
Perhaps they allow applicants to link bank accounts, pay stubs, and other key information to speed up this process.
Either way, only a cookie-cutter vanilla loan scenario is going to get a mortgage approval in as little as five minutes.
This means a W-2 borrower with good credit and nothing out of the ordinary. And perhaps really fast fingers and a fiber internet connection to make it through the application in record time.
Jokes aside, it’s available for both home purchases and mortgage refinances, assuming you’re the impatient type. Okay, I guess one more joke.
Guaranteed Rate President and CEO Victor Ciardelli notes that you can even be touring a house and generate the insanely fast approval while you’re walking around.
Is Speed Still Necessary in Today’s Cooler Housing Market?
While it feels like a distant memory, there used to be a waiting list to refinance a mortgage at certain banks.
And many loans took two months or longer to close, due to unprecedented demand related to record low mortgage rates.
Several years ago, just getting an underwriting decision could take a couple weeks.
Not so today, with mortgage application volume down to 1996 levels, per the latest report from the Mortgage Bankers Association (MBA).
But despite depressed levels of demand, there are still bidding wars and multiple offers on many home sales because inventory is also rock-bottom.
At last glance, months’ supply was hovering around three months, which is well below a healthy market at 4-5 months of supply or more.
So it’s not just low demand, it’s also a story of very limited supply. To help homes sell, they also recently launched Lock It, List It, which secures a rate before a buyer is found.
Guaranteed Rate cited Zillow data that found 48% of homes for sale still receive three or more offers.
This means it can still pay to have a mortgage approval in-hand if and when you tour a property.
Of course, a same day approval vs. five minute approval might just be splitting hairs. But the “fintech leader” clearly wants to be known as the fastest mortgage lender in the country.
Perhaps more importantly, Guaranteed Rate says applicants can close on their home loan in as little as 10 days.
Getting to the finish line that quickly seems a lot more valuable than rushing through an approval at the start.
Read more: Guaranteed Rate’s OneDown Offers a 1% Mortgage and $1,000 Toward Lender Fees
(photo: Steve Austin)