This BLOG On Final Mortgage Underwriter Approval Prior To Clear To Close Was PUBLISHED On December 6th, 2019
The mortgage process is a true process.
- It 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
- However, these conditions may be minor such as updated bank statements, updated paycheck stubs, and other updated docs
- After getting 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 that the lender is ready to prepare the closing docs and fund the loan
- Things can go wrong after getting the Final Mortgage Underwriter Approval
In this blog, we will discuss making sure that the Final Mortgage Underwriter Approval, borrowers will get a clear to close and close their home loan on time.
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 loan officers may disclose a higher rate
- Reason, why Loan Estimates are overly disclosed, is because lenders want to make sure 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 and it turns out to be higher, then they may no longer qualify
- This is the main reason why 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 exact number borrowers need to bring to the closing table.
When Does 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 other conditions
- After conditions get turned in, mortgage underwriters will issue updated conditional approvals
- After two or three stips, 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
Steps To Clear To Close And Home Loan Closing
There are steps left after the Mortgage Underwriter Approval prior to closing:
- The lender will be conducting a final review prior to the mortgage underwriting issuing 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 Review prior to clear to close
- Final verbal verification of employment
- Mortgage Rate needs to be locked
- Once the mortgage underwriter gets updated docs, a clear to close will be issued
- 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 that 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 as 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 prior to closing. The title agent sets the final numbers. The lender will wire funds after reviewing all numbers and the final closing disclosure. After the loan funds, the buyers receive the keys to their new home purchase. Sellers receive proceeds from the sale.