This ARTICLE On The Home Mortgage Process Leading To Clear To Close Was UPDATED And PUBLISHED On July 18th, 2019
Once borrowers have turned in the signed mortgage application and signed disclosures along with the requested documents such as W2s, bank statements, tax returns, and other necessary mortgage documents to your mortgage loan originator, the mortgage application package Home Mortgage Process and is now ready to be processed by the mortgage processor.
- The mortgage processor’s role and the job is to make sure all mortgage documents are complete and there are no missing items
- The Processor will process documents for a mortgage underwriter to review the whole file
- Upon reviewing for completeness, the processor will submit the loan file to the underwriting department
- A mortgage underwriter will be assigned
- Once the underwriter underwrites the loan application, the underwriter will issue a conditional mortgage approval if the borrower meets all necessary lending guidelines and requirements for the particular loan program
- The mortgage underwriter carefully goes over the borrower’s credit file which includes the following:
- Credit report
- Credit scores
- Assets, income
- Bank statements
- Tax returns, bankruptcy and/or foreclosure files if any
- Other determinants
- The underwriter is the person that issues a loan determination of whether it will approve, deny, or suspend the file
Conditional Mortgage Approval In The Home Mortgage Process
Very rarely will a mortgage be approved without conditions but it does happen.
- Initial mortgage approvals are conditional approvals.
- Conditional approval is a loan has been approved by the mortgage underwriter
- Conditional Loan Approval will become clear to close as long as further documentation that the mortgage underwriter needs to totally finalize mortgage loan application and conditions have been satisfied
- A clear to close means the same as ready to fund the mortgage loan
- Once a borrower gets clear to close in the home mortgage process, it means the lender is ready to prepare closing docs and fund the loan
Stages In The Home Mortgage Process
The mortgage loan approval process goes through several stages of reviews in the Home Mortgage Process and many borrowers often are aggravated why the conditions on the conditional approval were not asked or requested earlier in the mortgage approval process.
- Some of the mortgage conditions may seem super silly and not pertinent but borrowers still need to provide the information requested
- Mortgage bankers using their own warehouse lines of credit need to be meet compliance requirements
- Lenders also need to meet Fannie Mae, Freddie Mac, VA, USDA, and/or HUD guidelines because they need to resell the mortgages they originate
- One mistake means that the mortgage loan cannot be sold to the secondary market
- If lenders cannot sell loans to the secondary market, they will be stuck holding the mortgage loan in their portfolio
Clearing Mortgage Conditions During Home Mortgage Process
Once borrowers have met all the conditions of the mortgage loan underwriter, the mortgage underwriter will sign off on it.
- Depending on the mortgage lender, some lenders have their own QC, Quality Control Department, which will go over the signed off mortgage approval and they will issue the clear to close
- QC normally goes over the whole package from A through Z and make sure that the mortgage underwriter has not made any mistakes and makes sure the whole mortgage file is in compliance
- In a way, it is a second mortgage underwrite
- This process normally takes 24 to 48 hours
Definite NO NO’s During Mortgage Approval Process
From the time you submit your mortgage approval process, there are definite things you must not do or your mortgage approval process will come to an end and will be issued a mortgage loan denial.
- Do not apply for new credit.
- Each hard credit inquiry will drop credit scores by at least 5 points
- Do not charge new purchases on credit cards
- The mortgage lender WILL do a soft credit pull prior to a clear to close and new charges can affect debt to income ratios.
- Do not purchase any new items such as cars or new furniture
- Do not have any bank overdrafts.
- Even a $5 dollar overdrafts can be a cause of a mortgage loan denial
- Lenders do not accept anyone who had a bank overdraft in the past 12 months
- Do not change a job or quit a job
- Do not close out any bank accounts or do any bank transfers
- Make sure that down payment is not touched in a bank account
- Do not have irregular deposits or withdrawals without proper documentation
- Larger than $200 withdrawals or deposits without sourcing it needs to be explained
- Never be late on any credit monthly payment
- Do not dispute any derogatory credit or hire a credit repair company.
- Disputing derogatory credit with a credit balance will disqualify you from the mortgage approval process
- Do not pay any old collection accounts either because paying old collection account will plummet credit scores
- Borrowers can get mortgage loan approval with open collections and charge off accounts without having to pay them off
- The Gustan Cho Team at Loan Cabin Inc. is a national Fannie, Freddie, Ginnie Mae Direct Lender with no overlays on government and conventional loans with a policy of closing loans in 21 days or less
Locking Mortgage Rates
Mortgage rates needs to be locked sometime during the mortgage approval process and prior to a clear to close.
- Most lock periods are 15 days to 30 days
- The shorter the lock period, the fewer borrowers will be charged in mortgage adjustment costs and less costly it will be
- Unless you are on a borderline debt to income ratio, I recommend locking your rates on a 15-day lock unless the rates are volatile
Mortgage Borrowers who need a mortgage approval with a five-star national lender with no overlays, please contact us at Gustan Cho Associates at 262-716-8151 or text us for faster response. Or email us at email@example.com. Visit Gustan Cho Associates Mortgage and Real Estate Information Resource Center at www.gustancho.com for the latest news and new mortgage guidelines. I offer mortgage loan programs to mortgage loan borrowers in the United States with no mortgage lender overlays and can do one day underwrites. Two-week closings from the time we submit your mortgage loan application to underwriting.