Mortgage Approval Conditions Requested By Underwriters
Mortgage Approval Conditions In Mortgage Process
The mortgage process is a process that every mortgage loan application needs to go through. After a mortgage loan originator issues a pre-approval letter, the home buyer will then shop for a home and once they find a home they want to purchase, they enter into a real estate purchase contract. Once the home buyer submits the executed signed home purchase real estate contract to the mortgage loan officer, the mortgage process starts. The mortgage loan originator will be requesting documents such as two years tax returns, two years W-2s, 30 days paycheck stubs, 60 days paycheck stubs, and other documents so the mortgage loan file can be submitted to processing. A mortgage loan processor then prepares the mortgage application file and gets it ready to submit to underwriting for the mortgage loan underwriter to analyze the whole mortgage loan file so the borrower can get a conditional mortgage loan approval. Once the underwriter reviews the mortgage loan applicant’s file and feels comfortable with the overall credit and income profile of the mortgage loan borrower, the mortgage loan underwriter will issue a conditional mortgage loan approval. A conditional mortgage loan approval means that the mortgage loan borrower will get approved for the mortgage loan as long as they can meet the mortgage approval conditions stated on the conditional mortgage approval. The key with every mortgage loan application is to get it submitted as complete as possible so there are not too many mortgage conditions. Every mortgage approval conditions needs to be satisfied for the mortgage loan underwriter to issue a clear to close. A clear to close is when the mortgage loan underwriter signs off on the mortgage loan borrower and means that the mortgage lender is ready to prepare mortgage loan closing docs and the mortgage lender is ready to fund on the mortgage loan.
What Are Mortgage Approval Conditions
When a mortgage loan borrower gets a conditional mortgage loan approval, it comes with mortgage approval conditions. Mortgage conditions needs to be satisfied in order for the conditional mortgage approval to become an official mortgage approval and to get a clear to close. If any of the mortgage approval conditions are not satisfied, the mortgage loan file will not get a clear to close issued. A sloppy processed mortgage loan application will definitely come back with a lot of mortgage conditions by the mortgage loan underwriter. Examples of mortgage conditions can be updated bank statements, letters of explanations of items such as gaps in employment, credit inquiries, overdrafts, reasons for short sale, reasons for bankruptcy, reasons for deed in lieu of foreclosure, reasons for foreclosures. Other conditions may be providing full child support and divorce paperwork, bankruptcy documents, divorce documents, appraisal, homeowners insurance invoice, verification of rent, verification of mortgage, verification of deposit, verification of employment, and credit supplements. The key in the mortgage business is to have as little mortgage conditions as possible and the trick in getting the least amount of mortgage conditions is to have the mortgage loan file as complete as possible prior to submission to underwriting.
Cases Where Mortgage Approval Conditions Cannot Be Met
There are cases where mortgage approval conditions cannot be met and the conditional mortgage loan approval will become null and void. As mentioned in many of my other article, the pre-approval stage of the mortgage process is the most important stage of the whole mortgage application and mortgage approval process. If a mortgage loan originator is not diligent when pre-qualifying and pre-approving a mortgage loan applicant and issues a sloppy pre-approval letter, the whole deal may be a dead deal. There are so many cases where a mortgage loan borrower gets a last minute mortgage loan denial by a mortgage lender just because the mortgage loan originator was not diligent in pre-qualifying the mortgage loan borrower. One common examples where a conditional mortgage loan approval becomes a mortgage loan denial is when the mortgage loan underwriter asks for verification of rent but the mortgage loan borrower cannot provide a VOR because they have been living rent free with family. Verification Of Rent is required on all manual underwriting mortgage loan applicants as well as mortgage loan borrowers with credit scores of under 620 FICO. There are many mortgage loan officers who take on a FHA mortgage loan application from a mortgage loan borrower right after a Chapter 13 Bankruptcy discharge and submits it as a manual underwriting file and when they get a conditional mortgage loan approval by a mortgage underwriter that states verification of rent is required. The mortgage loan originator realizes that the borrower is living rent free with family and cannot satisfy the verification of rent. This mortgage loan file which has been conditionally approved will result in a mortgage loan denial.
Stress With Mortgage Approval Conditions
There are times where mortgage underwriters will list tons of mortgage approval conditions where borrowers can stress over it. However, many times when mortgage loan underwriters lists conditions, the loan processor may have the conditions already and may be duplicates. Borrowers should not stress out over mortgage conditions and provide them one by one and submit them all at once. Submitting mortgage conditions piece meal is not recommended. If it will take you an extra few days to accumulate all of the mortgage conditions to send it all at once