This guide covers final mortgage underwriter approval prior to clear to close. The mortgage process is a true process that takes time. It is important that all documents are legible and complete, with no missing pages. The mortgage process requires teamwork.

Borrowers must fully cooperate on documents and paperwork requested by the mortgage processor. A mortgage processor is assigned to the file once the borrower turns in the real estate purchase contract.

The mortgage processor is the quarterback of the whole process and everything overseas from when she is assigned to the clear to close. A great processor will be nit-picky and very detailed. If the mortgage processor asks for detailed information, please understand she is on your side, and it is better to deal with her than the mortgage underwriter. 

The Start Of The Mortgage Process Leading To The Final Mortgage Underwriter Approval

Once a mortgage processor is assigned to the file, the approval process officially starts, and the time clock is on to close the mortgage on time. The loan application and qualifying process starts with the loan officer qualifying borrowers. Once pre-approved, the loan officer will issue the pre-approval letter.

Armed with a pre-approval letter, home buyers can enter into a real estate purchase contract. Once the contract is submitted to the loan officer, the official mortgage process starts. Getting the Final Mortgage Underwriter Approval is the goal in the mortgage process. The Final Mortgage Underwriter Approval will come with conditions.

These conditions, such as updated bank statements, updated paycheck stubs, and other updated docs, may be minor. After getting the final mortgage underwriter approval, the next step is clear to close. Mortgage Underwriters are the ones who issue a clear to close. A clear to-close means the lender is ready to prepare the closing docs and fund the loan. Things can go wrong after getting the Final Mortgage Underwriter Approval.

The Loan Estimate Versus The Closing Disclosure

A Loan Estimate or LE is the initial disclosure borrowers receive with tentative closing costs. Loan Estimates will normally have inflated closing costs. This is because lenders do not know the exact closing costs. Rates are normally not locked so that loan officers may disclose a higher rate.

The reason why Loan Estimates have been overly disclosed is that lenders want to make sure of the worst-case scenario. Underwriters want to qualify borrowers with higher fees and costs. If borrowers get qualified with higher closing costs estimates and the fees/costs turn out lower, they are still qualified.

If borrowers get qualified with lower costs/fees, which are higher, they may no longer qualify. This is the main reason closing costs are overly disclosed on the Loan Estimate. The Closing Disclosure has the final numbers stated on the form. Closing Disclosures are not issued unless the mortgage rate is locked. The cash-to-close on the final closing disclosure is the number borrowers must bring to the closing table.

When Is The Final Mortgage Underwriter Approval Issued

The initial mortgage loan approval will be conditional approval by the underwriter. The conditional loan approval has a long list of conditions such as appraisal, verification of employment, IRS 4506T Income Verification, and many others. After conditions get turned in, mortgage underwriters will issue updated conditional approvals.

After two or three steps, the final mortgage underwriter approval will be issued with final conditions for a clear to close. Getting the final mortgage underwriter approval means a lot.

The borrower is very close to the finish line. The clear to close is the finish line of the mortgage progress. The mortgage underwriter issues the clear to close after she has cleared all conditions of the conditional loan approval.

Steps To Clear To Close And Home Loan Closing

There are steps left after the Mortgage Underwriter Approval before closing. The lender will conduct a final review before the mortgage underwriting issues a clear to close. Documents will be double-checked. Older docs will need updated docs required. A final soft credit report will be pulled. Some lenders have QC reviews before clear to close—final verbal verification of employment. Mortgage Rate needs to be locked. A clear to close will be issued once the mortgage underwriter gets updated docs. Once a clear to close is issued, the file gets assigned to the closing department.. Final Closing Disclosure will state the cash-to-close. Clear to close means the lender is ready to prepare final closing documents and send them to the title company. Clear to close means that the lender is ready to fund the loan.

Scheduling The Home Closing

The title company is in charge of arranging the closing date. The title agent will notify both buyers and sellers of the time and location of the closing. The title agent quarterbacks the closing with the lender, buyers, and sellers. Lenders send closing docs to the title company about a day or two before closing. The title agent sets the final numbers. After reviewing all numbers and the final closing disclosure, the lender will wire funds.  After the loan funds, the buyers receive the keys to their new home purchase. Sellers receive proceeds from the sale.