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Mortgage Approval and Closing

What will happen after the underwriting is completed and verified?

It’s exciting to get final mortgage approval and closing from the underwriter, but it’s not yet time to celebrate.

You’ll have to go through a few more steps before getting the keys to your new home.

The lender will need to double-check your income and work history. You must also sign final documents and pay closing costs.

The final steps in the mortgage application procedure

There are only a few more hurdles to cross after your mortgage underwriter has approved the loan:

  • Your lender will perform a last assessment, double-checking your paperwork to ensure they are proper.
  • The lender will most likely perform a final quality control check, retrieving your credit report and validating your employment.
  • You’ll get your closing documents at least three business days before the scheduled closing date for review and signature.
  • To close and sign your final documents, you’ll bring in your cash.
  • Some, if not most, lenders will fund your home loan immediately (table funding), while others may require a day or two to review the signed paperwork.

To avoid unpleasant surprises, learn how your lender operates ahead of time.

Conditional approval vs. final approval

Before receiving a ‘final approval,’ most borrowers receive a ‘conditional approval,’ so don’t be shocked if your mortgage underwriter has some questions about your financial status.

Mortgage underwriters are people who work for the lender and are responsible for examining and analyzing your ability to repay the loan.

For verification of employment, the underwriting process will look at your bank statements, credit history, and pay stubs. Self-employed borrowers may be required to furnish tax return transcripts.

If anything in these paperwork appears to be incorrect or raises doubts for the lender, you may be granted a conditional approval with a few additional processes before closing.

The underwriter will offer a list of requirements as part of your conditional approval. These requirements are referred to as “conditions” or “pre-documentation conditions.”

From ‘conditional permission’ to ‘clear to close,’ there’s a lot to consider.

You may need to submit extra documentation to meet these requirements, such as:

  • Additional bank statements or pay stubs
  • Gift lettersĀ 
  • Insurance verification
  • Explanations

It’s unnecessary to take these demands for further information personally. Conditional approvals are a regular occurrence during the mortgage application process.

Your loan officer will return all of your conditions to the underwriter, who should then issue a “clear to close,” indicating that you’re ready to sign loan documents. Your final permission is based on this last check.

How long does it take for the final permission to be granted?

The possibility that your loan will be approved takes 2 weeks from conditional to final but still, it’s not sure.

Responding quickly to your underwriter’s inquiries can assist speed up the process. If feasible, submit the additional papers on the same day as the request.

What happens after you’ve received final approval?

You’ll attend the loan closing once you’ve received final mortgage approval (signing). For your cash-to-close, you’ll need to present a cashier’s or certified check, or make arrangements in advance for a wire transfer.

Make sure you don’t make any changes to your mortgage application as your closing date approaches, as this could result in the lender revoking your final approval.

Purchasing a car, for example, may cause you to exceed your debt-to-income ratio (DTI) limit. Similarly, asking for a personal loan or opening a new credit card account could have an impact on your credit score.

Even after signing documentation, your home loan application could be declined if this happens.

A final loan approval isn’t quite final in this regard. It’s still possible that it’ll be revoked.

Review of Documents: LE vs. CD

When you applied for a mortgage, you may recall receiving a Loan Estimate (LE) form from the lender, which explained your mortgage terms and estimated your expenditures.

You will now get a Closing Disclosure (CD) form at least three working days prior to your closing date.

What exactly is the distinction between these two documents?

This paper offers an estimate of your loan terms and costs, which may vary depending on the type of loan, mortgage rate, and loan amount.

Closing Disclosure Form: This document outlines what you’re expected to pay on closing day as well as for your monthly installments.

Although there shouldn’t be much of a difference between your LE and CD, it’s up to you to double-check.

After Closing Disclosure, what happens next?

A Closing Disclosure must be sent by your mortgage lender at least three business days before your closing date, according to federal law.

When you receive your CD form, compare it to the Loan Estimate you received when you applied for your mortgage.

On your Closing Disclosure, some expenses on your Loan Estimate, such as the loan origination fee and appraisal fee, should never alter.

Costs that may differ between LE and CD

Although lender fees should not change between your LE and CD, various expenditures indicated on your CD may.

Some can rise by as much as 10%, while others can rise by any amount.

Survey fees, title search fees, and pest control fees, for example, might increase by up to 10%. Because these services are offered by third parties, the lender does not have direct control over the costs.

Some fees are dependent on the final details of your loan, so they could drastically increase between your LE and CD. A down payment may be required by your homeowners insurance provider, for example. Alternatively, you may be required to pay property taxes in advance. Delays in your closing date may also raise some charges.

The “ultimate” approval of a loan is the “financing” of the loan

Only after the lender funds the loan is your mortgage transaction complete. This implies the lender has gone over your signed documents again, obtained your credit report again, and double-checked that nothing has changed since the underwriter last looked at your loan file.

You can acquire the keys to your new house once the financing is funded.

On your Closing Disclosure, some expenses on your Loan Estimate, such as the loan origination fee and appraisal fee, should never alter.

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