Clear To Close: Final Stage In Mortgage Approval
There are multiple stages in the mortgage approval process. The first stage is getting a pre-approval. The mortgage loan borrower normally applies online and completes a 4 page 1003 mortgage application. The mortgage loan originator will go over the 1003 mortgage application and make sure all the information completed by the mortgage applicant is correct prior to running a tri-merger credit report. Once the mortgage loan originator gets the results of the tri-merger credit report, he or she then contacts the mortgage applicant to go over the credit report and credit scores and make sure there are any errors. The mortgage loan originator then submits the mortgage file to the automated underwriting system for an automated approval. An automated approval per DU FINDINGS or LP FINDINGS is what you need for you to get a pre-approval and shop for a home.
Shopping For A Home After You Get Pre-Approved
Once you get an approved eligible per DU or LP FINDINGS, you can go and shop for a home. Once you get a home you like to purchase, you enter into a real estate purchase contract. You then submit your real estate contract to your mortgage lender and your mortgage loan originator will send you a formal mortgage application and disclosures for your signature. You also need to provide mortgage documents such as 2 years tax returns, two years W-2s, 60 days bank statements, and other documents pertaining to processing and underwriting your mortgage loan. Your mortgage loan application and documents gets processed by a mortgage loan processor and your loan package gets assigned to a mortgage loan underwriter.
Conditional Mortgage Loan Approval
If everything goes well, the underwriter will issue you a conditional mortgage loan approval. A conditional mortgage loan approval is a letter of intent where the mortgage lender is able to grant you a formal mortgage loan approval and clear to close once you have submitted all of the requested conditions. Conditions include appraisal, appraisal review, verification of employment, updated pay check stubs, updated bank statements, letter of explanations for larger or irregular deposits, documents missing, income tax verification with IRS, and other items or proof on those items listed on the mortgage application such as bankruptcy papers, foreclosure papers, HUD settlement statement if the borrower had a prior short sale, insurance company information, etc.
Clear To Close: Ready To Fund
A clear to close is when a mortgage lender is ready to fund and send out mortgage documents to the title company. A clear to close is the ultimated mission in the mortgage approval process. Getting a clear to close from the mortgage lender means that all of your mortgage conditions have been met and the mortgage lender has given everyone a thumbs up to go ahead an schedule the closing and that they are ready to wire the money to the title company. The mortgage lender will do a final verification of funds prior to issuing a clear to close and do a final credit soft pull on the mortgage loan borrower. Once the final approved HUD settlement statement is signed by all parties and the wire is released by the mortgage lender, the real estate transaction is officially closed and keys are exchanged.