This guide covers clearing mortgage conditions of conditional loan approval.  After borrower’s mortgage application has been processed and underwritten, the mortgage underwriter will issue a conditional mortgage approval. Clearing Mortgage Conditions is required for the underwriter to issue a clear to close.

A conditional mortgage approval is a letter of intent that the lender will issue a clear to close as long as the clearing mortgage conditions can be met by borrowers.

Many times, the process up to the conditional loan approval is easy. It is clearing mortgage conditions that can be stressful. This is the period where it can drive both the borrower, processor, and loan officer crazy. The mortgage underwriters issue mortgage conditions. Most conditions are reasonable, and clearing mortgage conditions should not be stressful—the key to having as few conditions as possible.

What Are Clearing Mortgage Conditions on a Conditional Loan Approval

Conditional loan approval is a stage in the loan application process where a lender reviews the borrower’s application and financial information and provides a preliminary approval for the loan, subject to certain conditions being met. These conditions typically include providing additional documentation, meeting specific requirements, and fulfilling certain criteria.

What Are Common Conditions on Conditional Loan Approval

Clearing mortgage conditions for a conditional loan approval might include income and employment verification. The lender may require recent pay stubs, tax returns, or other documents to confirm the borrower’s income and employment status. The lender might review the borrower’s credit report again to ensure their credit score and history remain consistent.

For real estate loans, the lender may require an appraisal to assess the value of the property being used as collateral.

Meeting all the conditions is crucial for securing the loan. Borrowers should work closely with the lender, promptly providing any requested documents and addressing any concerns to increase the likelihood of obtaining the final loan approval. Additional documents such as bank statements, asset statements, and other relevant financial information may be requested. The lender may require proof of insurance coverage if the loan involves collateral, like a car or property.

Satisfactory Property Conditions

If the loan involves real estate, the property may need to meet certain standards or undergo repairs before final approval. Once the borrower submits the required documentation and meets the specified conditions, the lender will review the information to ensure everything is in order.

For real estate loans, the lender might need to conduct a title search to ensure no property ownership issues.

If all conditions are satisfied, the loan will move forward to the final approval stage, and the borrower will receive a formal commitment letter detailing the loan terms. Borrowers need to understand that conditional approval does not guarantee final approval.

The Importance of Submitting Complete Documents During Submission

There will be less clearing mortgage conditions on files that have been properly submitted. To get as few conditions as possible, ensure the processor submits a complete mortgage application package to the underwriter.

The mortgage processor often might skip certain items because they have not gotten documents back from the borrower.

Any items that have not been submitted will come back as mortgage conditions, which could lead to delays in closing the mortgage loan. This article will discuss and cover clearing mortgage conditions after conditional loan approval. During the conditional loan approval stage, the lender evaluates the borrower’s creditworthiness, income, employment history, and other relevant factors to determine if they meet the criteria for the loan. If the borrower satisfies these initial requirements, the lender will issue a conditional approval outlining the terms and conditions under which the loan will be granted.

Clearing Mortgage Conditions Is What Causes Delays In CTC

The main cause for delays in getting a mortgage clear to close is mortgage conditions. The key to meeting the closing date deadline by getting a quick clear to close is to ensure that the mortgage loan application has been processed as completely as possible the first time around. Borrowers should get the necessary documents, such as the following:

• Two years tax returns, two year’s W-2s
• Most recent paycheck stubs
• Two months bank statements
• letters of explanations for credit inquiries
• bankruptcy, foreclosure
• deed-in-lieu of foreclosure
• short sale
• 401k statements
• investment accounts
• divorce decree
• letters of explanations for derogatory accounts

Other documents requested by the mortgage loan originator. Any missing documents not submitted with the initial mortgage documents will be conditioned on the initial conditional mortgage approval.

Conditional Mortgage Loan Approval

Once borrowers get conditional loan approval, the underwriter will request a list of mortgage conditions. The next step is clearing mortgage conditions. All conditions must be met and submitted to the underwriter for the underwriter to issue a clear-to-close.

It is the processor’s job to get the necessary conditions either by requesting it directly from the borrower or requesting it through the loan originator. It is not uncommon to have a line item of over 20 conditions.

The key is to get all the conditions and re-submit them to the underwriter. Once conditions listed on the conditional approval are satisfied and submitted to the underwriter, it normally takes 24 to 48 hours for the underwriter to issue a clear-to-close. Or get borrowers an updated conditional loan approval.

Clearing Mortgage Conditions For UPDATED Conditional Approvals

Updated conditional loan approval means the underwriter did not get all the conditions. Or that the underwriter issued a fresh batch of conditions. Again, the underwriter will not sign off on a clear to close if the requested mortgage conditions are not submitted. This will cause a delay in getting a clear to close. Some mortgage underwriters will not reply for 48 to 72 hours after submitting conditions. So, every time conditions are submitted, and it is missing items, borrowers look at delays. Due to the delay factor, many veteran-experienced processors will not submit conditions even if they are missing just one minor item.

Qualifying For a Mortgage With a Lender With No Overlays

The borrower may need to meet specific debt-to-income ratio requirements to ensure their ability to manage the new loan payments. Home Buyers who need to qualify for a mortgage with a lender with no overlays on government and conventional loans can contact us at Gustan Cho Associates Mortgage Group at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com.