day 1 certainty

Day 1 Certainty From Fannie Mae

Homeowners and homebuyers want to close their mortgages quickly and without issues. Over the years, there have been numerous initiatives to do just that, and the results have been exceptional. Gone are the days of closing a mortgage in two to three months, and in our closing a mortgage two to three weeks.

One ingredient to this is the Day 1 Certainty validation service from Fannie Mae.

What is Day 1 Certainty from Fannie Mae?

Introduced in 2017, the Day 1 Certainty is a validation service used by Fannie Mae’s Desktop Underwriting (DU) software that was created to reduce the amount of documentation needed for a new mortgage, speed up the approval process, and provide a clearer picture of appraisal waivers.

Day 1 Certainty is an excellent way to get a fast approval for your loan application so you can close quickly.

Does this impact mortgage rates?

Yes, and in a positive way. An important ingredient to low mortgage rates is speed and efficiency. The Day 1 Certainty program from Fannie Mae is just that.

As the Day 1 Certainty program rolls out, lenders will be able to close their loan applications faster and with fewer issues, and this means their cost to close a loan will be lower. And that cost savings will be passed along to consumers in the form of lower mortgage rates.

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How much does Day 1 Certainty help with efficiency?

Great question! According to Experian, Fannie Mae’s Day 1 Certainty will have a huge impact on the time it takes to validate income, employment, and assets.

As lenders evaluate verification solutions, one of the key differentiators to seek is Fannie Mae Day 1 Certainty, which claims to slash the average cycle time for income validation by 8.1 days, employment validation by 11.9 days, and asset validation by 6.1 days. *

Reducing cycle times by this much is a huge boost to efficiency in the loan process.

A Smoother Loan Process

As some homeowners know, the mortgage process has been known to be a bit cumbersome, so for those who qualify for the Day 1 Certainty program, this is an opportunity to make the loan process a bit smoother by reducing documentation and decreasing issues with processing a loan application.  

The good news is Fannie Mae does not charge any additional costs for the Day 1 Certainty program. Some additional great news is that some borrowers will usually avoid having the loan officer complete an income verification with the IRS prior to approval. Around tax time, that can be a huge help.

Fannie Mae loan options

Through their approved mortgage lenders, Fannie Mae offers a wide variety of mortgage terms to meet the needs of homeowners and potential homebuyers. The mortgage giant offers the following terms:

  • 30-year fixed
  • 25-year fixed
  • 20-year fixed
  • 15-year fixed
  • 10-year fixed

The fixed-rate terms listed above are fairly self-explanatory (rate and payment do not change, they are fixed for the entire term). Fannie Mae offers adjustable rate mortgage terms as well:

  • 5/1 ARM
  • 7/1 ARM
  • 10/1 ARM

Adjustable rate terms have a fixed rate/payment period of 5, 7, or 10 years and then each year after the fixed period, the rate and the payment can adjust. Also, the adjustable rate loans are based on 30 years (or 360 months). Sometimes, an adjustable rate term is .25% to .5% below 30-year fixed rates; check with your loan officer as to what the current rates are to see if an adjustable rate mortgage makes sense.

Is There A Pre-Payment Penalty For Fannie Mae Loans?

No. Fannie Mae’s loan terms do not have a pre-payment penalty, and they do not have a balloon payment. Unless otherwise noted, your monthly mortgage payment will include principal and interest (verify with your trusted loan officer).

And for those who set up an impound account to pay their property taxes and property insurance, you will also see an additional amount added to your payment to cover the impound requirements. For most Fannie Mae loans, impounds are not required.

Steps to a Fast Closing with Day 1 Certainty

If you are refinancing your current mortgage or purchasing a home, I’m sure you’ll want to finish the transaction as soon as possible. Follow these simple suggestions, and your loan will close faster than normal.

  • Be responsive – answer emails or phone messages within 12 to 24 hours.
  • Turn in your documentation requests within 24 hours.
  • Sign your disclosures within 24 hours.
  • Talk to your loan officer about potential issues so he or she can better prepare for them.
  • If one is needed, schedule your appraisal inspection within two to three days
  • During the process, avoid unnecessary travel.

Following these suggestions will help close your loan fast. Some loan applicants are able to close their refinance application within two to three weeks. And that can also happen with a purchase, just a bit more difficult since there are two parties to the transaction (buyer and seller).

Bottom Line On Fannie Mae’s Day 1 Certainty

Fannie Mae’s Day 1 Certainty will speed up the loan process, reduce documentation (which creates better efficiency), and lower the cost of processing a loan application. This is a huge win for homeowners and homebuyers, and the end result will be lower mortgage rates for the consumer.

Loan Officer Kevin O'Connor

About The Author

Loan Officer Kevin O'Connor has over 17 years of experience as a Mortgage Loan Originator and is a trusted resource for mortgage education and information. He's the content creator of K.O. Home Loan Solutions and is licensed by the state of California and the Nationwide Mortgage Licensing System. He has a top rating with the Better Business Bureau, Google, Yelp, and Zillow. You can contact him at 1-800-550-5538. CA DRE #01499872 / NMLS #247447