Home Loan Approval Process
This BLOG On The Steps Of Home Loan Approval Process Was Written By Gustan Cho NMLS 873293 of The Gustan Cho Team at CrossCountry Mortgage Inc. NMLS 3029
Most people dread the Home Loan Approval Process but the mortgage approval process is really not too bad as long as you know what you face and expect. Granted, the Home Loan Approval Process is not an easy process and can be frustrating because of all of the documents you need to provide to your mortgage lender such as tax returns, W-2s, cancelled checks for verification of rent, bank statements, documents such as bankruptcy papers, foreclosure papers, divorce decree, child support paperwork, business tax returns if applicable, letters of explanations, and other documents that mortgage lenders request. There are several stages of the Home Loan Approval Process. There is no reason for any borrowers who have a solid pre-approval not to be able to close their mortgage loan on time. Also, there is no reason why any borrowers should stress over the mortgage approval process as long as both the loan officer and borrowers can work together as a team and cooperate with the request of documents. The main reason for borrowers to get last minute loan denials or stress during the mortgage process is because the loan officer did not properly qualify borrowers and issued the pre-approval letter without proper due diligence.
Here are reasons for last minute mortgage loan denials:
- Loan officer did not properly qualify borrower
- Loan officer did not know mortgage guidelines
- Loan officer did not know about their company’s lender overlays
Stages In Mortgage Approval Process
The first stage in the mortgage approval process is the qualifying for a mortgage loan.
- The mortgage qualification process starts prior to the mortgage loan borrower shopping for a new home.
- A pre-approval is needed by a real estate agent in order for the home buyer to be able to put a written offer on a property.
- A pre-approval is issued by a mortgage lender.
- The mortgage lender will take the borrower’s mortgage application, collect income and asset information, and run a credit check.
- The mortgage lender will also run an Automated Underwriting System check for an automated approval by Fannie Mae.
Documents Needed To Proceed With Mortgage Process
Once the home buyer gets a signed real estate purchase contract, he or she then submits it to the mortgage lender where the lender will prepare the official mortgage loan application along with the disclosures for signature from the mortgage loan borrower.
- The mortgage lender will require documents such as tax returns and other documents that need to be processed prior to going into underwriting.
- Once the mortgage application is processed, it gets submitted to underwriting.
- Within two days, the underwriter will decide on an approval or denial.
- If approved, appraisal is ordered and additional conditions would be requested such as verification of employment, update bank statements, updated paycheck stubs.
- Once the appraisal gets completed and the additional conditions are met, it goes through a final underwriting QC review and appraisal review.
- Once Quality Control signs off, a clear to close is issued.
- A clear to close means that the mortgage lender is ready to fund and disperse the loan.
- Closing arrangements are made and title changes hands when the mortgage lender wires the mortgage amount to the title company.
How Long Does The Home Loan Approval Process Take
There is no reason why the Home Loan Approval Process should take longer than 30 days. The Gustan Cho Team at CrossCountry Mortgage NMLS 3029 has a 21 day closing policy where most of the home loans at CrossCountry Mortgage takes no more than 21 days. There are many mortgage companies that do not have any regards to borrowers and the closing date. There is no reason why a mortgage loan cannot close in 30 days or less and why any home closing needs to be delayed.