Mortgage Process Leading To Clear To Close And Closing On Time

Gustan Cho Associates are mortgage brokers licensed in 48 states

This Article Is About Mortgage Process Leading To Clear To Close And Closing On Time

The Basic Steps In Mortgage Process Leading To Clear To Close starts when the mortgage processor is assigned to the borrower’s file. A mortgage processor will be assigned to a file once the loan officer has done the following:

  • The borrower completes a 4-page online mortgage application at by clicking on the Apply Now icon on the top right of this website
  • Loan Officer will get alert once the mortgage applicant completes and submits a mortgage loan application
  • Loan Officer will review the online mortgage application
  • Loan Officer will contact the borrower to go over the mortgage application
  • The loan officer will make sure everything is correct on the 1003 mortgage loan application
  • Loan Officer will pull a tri-merger credit report on the mortgage loan borrower

The mortgage loan originator need to thoroughly review the tri-merger credit report and go over line item per line item with the borrower. Make sure there are no credit disputes on non-exempt derogatory credit tradelines. Need to go over with the borrower if the credit report is correct. Outstanding judgments and/or tax-liens or other public records not reporting on credit report will get discovered when lenders do a national public records search.

The Importance Of Getting An Automated Approval Per AUS

Getting An Automated Approval Per AUS

Mortgage Loan Officer will submit the completed mortgage application along with the credit report to the automated underwriting system (AUS) for results. The file cannot go forward without an approve/eligible per automated underwriting system (AUS). FHA and VA loans are the only two loan programs that allow manual underwriting. Borrowers with a refer/eligible per automated underwriting system are eligible for manual underwriting on FHA and VA loans. Manual underwriting guidelines apply.

Prior To Issuing A Pre-Approval Letter, Loan Officers Need To Follow The Steps Below:

  • Seeking an Approved Eligible per AUS Findings
  • Mortgage Loan Officer will issue a pre-approval
  • Armed with a solid pre-approval, mortgage borrower can now shop for home
  • Borrower hires a real estate agent and looks for a home
  • Home Buyers chooses a home they want to purchase
  • The homebuyer will submit  executed real estate purchase contract to the loan officer
  • A mortgage processor then gets assigned to the file
  • The mortgage process has started

Processing Stage Of Mortgage Process Leading To Clear To Close

Once the home buyer submits the executed real estate purchase contract, the mortgage process starts.

  • The mortgage loan officer will request mortgage documents
  • Examples of mortgage documents required are two years tax returns, paycheck stubs, 2 years W-2s, 60 days bank statements, bankruptcy papers if applicable, divorce decree if applicable, investment and retirement accounts, and other necessary paperwork
  • The file is assigned to a mortgage processor
  • Mortgage package is reviewed by an assigned mortgage processor and prepared for underwriting
  • Mortgage package needs to be complete as possible to avoid delays
  • Mortgage processor will make sure all documents are eligible, has no missing pages, and are labeled

The mortgage processor’s role is to make sure all documents are complete.

Underwriting Stage Of Mortgage Process Leading To Clear To Close

Mortgage Process Leading To Clear To Close

The mortgage underwriter is the most important person in the overall mortgage approval process. The mortgage underwriter is the person who approves or denies a mortgage loan applicant and issues a clear to close.

  • Underwriter reviews and scrutinizes mortgage loan package
  • Makes sure borrowers and property meet mortgage guidelines and lender overlays
  • Underwriter’s job is making sure that everything is in order
  • Underwriters cross-check the information listed on the mortgage application with the documents provided
  • The appraisal is ordered as well as other necessary inspection
  • Conditional approval is issued

Once conditions from conditional loan approval are provided to the underwriter from the mortgage loan processor, the file is reviewed for a clear to close.

Conditional Approval

Conditional Loan Approval is issued by the underwriter after the underwriter feels confident that the borrower meets all mortgage guidelines and lender overlays. The borrower needs to provide all conditions requested in order for the underwriter to issue a clear to close.

  • The mortgage loan is approved contingent that all of the conditions issued by the underwriter can be met
  • Such conditions include letters of explanations on credit inquiries, bankruptcies, foreclosure, additional documentation, job gaps, address gaps, and reasons for prior bad credit
  • Once all conditions are submitted, it is reviewed by the underwriter and if sufficient, the underwriter can sign off on the loan and issue a clear to close
  • Some lenders will require a second underwriting department to double check the borrower’s file before the clear to close is issue
  • The second set of underwriting review is call QC Underwriting Review
  • It gets assigned to a senior underwriter
  • Underwriting Manager double checks everything and will validate the original mortgage underwriter’s clear to close

Once the QC Underwriting Review is passed, the mortgage underwriter issues a clear to close.

Final Step Of Mortgage Process: CTC

Final Step Of Mortgage Process

A clear to close is issued when the mortgage lender is ready to prepare the closing documents and fund the loan:

  • The closing department assigns a closer
  • The closer and the mortgage processor get in touch with the title company
  • The final Closing Disclosure is prepared for all parties and the title company to review
  • The CD is the replacement of the HUD
  • Cash To Close, Itemization on costs, fees, and breakdowns of the funding is all stated on the Closing Disclosure
  • Closing date is set
  • The mortgage processor and the staff of the lender closing department contact the title company and make arrangements for a date to close
  • The closing department assigns a closer
  • The closer prepares the closing docs and sends it to the title company
  • Once all paperwork is signed by buyers and sellers and transaction closes, the lender will wire the funds 
  • Once the loan closes, ownership transfers hands

The purchaser of the home is now the official homeowner. The seller gets paid and keys are exchanged. The transaction has closed. This is the moment everyone has been waiting for.

Related> What Is The Timeline For A Clear To Close

Related> Clearing Conditions For A Clear To Close

Related> Timeline From Pre-Approval To Clear To Close