Mortgage Loan Closing Process From Application To CTC
This BLOG On Mortgage Loan Closing Process From Application To CTC Was UPDATED And PUBLISHED On July 25th, 2019
A normal mortgage loan closing normally takes 30 days.
- However, we can probably expedite a mortgage loan closing in the case of an emergency
- There are instances where home closings can be done in less than 2 weeks
- If borrowers cooperate with the mortgage lender in getting all required documents and conditions, closings can be expedited
The first step towards a mortgage loan closing is the mortgage application.
- The first step in the mortgage process is when the loan officer takes an official mortgage loan application called 1003
- The loan officer will prepare the 1003 mortgage application for loan applicants
- Borrowers need to sign and a credit will be pulled
- Loan officer reviews credit and runs the file through the Automated Underwriting System
- Pre-Approval is issued
- Once borrowers get executed real estate purchase contract, disclosures get issued
- Borrowers need to sign proper disclosures and a list of required documents that will be needed
- Required documents include two months bank statements, two years tax returns, 30 days paycheck stubs, two years W-2’s, 12 months canceled checks for rent verification, asset information such as 401k or IRA statements, and other documents that apply to the mortgage loan borrower such as bankruptcy papers, child support payments, divorce decree, etc.
- This process normally takes no more than two days
- The Mortgage Process has officially started
Once the loan officer has the real estate purchase contract and documents required, the loan application gets assigned to a mortgage processor.
- Once the borrower has submitted the signed application and all the required requested documents, it gets processed
- The mortgage processor makes sure that all of the information in the mortgage application is correct
- Mortgage Processor makes sure all the necessary documents are in order to avoid potential conditions by the underwriter
- Processing takes one to two business days
- The loan is then submitted to underwriting
Once the mortgage loan processor has processed the mortgage loan application, it gets submitted to the underwriting department and is assigned to an underwriter.
- The underwriter goes through the application and verifies all the information on the application and cross-checks it with the documents
- They verify tax returns with the IRS, make sure there are no overdrafts on bank accounts, and makes sure that are able to afford the monthly mortgage payments
- They also review the credit report and will note any discrepancies and vague items that need clarifying.
- This normally takes two days
Conditional Loan Approval
Once the underwriter reviews your file and is comfortable with your ability to pay, you will get conditional approval.
- The appraisal is then ordered
- The underwriter will issue additional conditions, if any, for clarification such as updated bank statements, updated paycheck stubs, verification of employment, or other minor conditions
- The appraisal normally takes a week
- Once the appraisal is turned in, the underwriter reviews the appraisal and will grant a clear to close
- To be on the safe side, a 30-day window is what it takes for a mortgage loan closing
- However, the fastest a mortgage loan closing can occur is three weeks as long as everyone is on the same page