This guide covers the mortgage process leading to clear-to-close and closing on time. The basic steps in the mortgage process leading to clear-to-close and closing on time. The mortgage loan and approval process 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 loan officer will be alerted once the applicant completes and submits a mortgage loan application. The loan officer will review the online mortgage application. The loan officer will contact the borrower to go over the mortgage application. The loan officer will ensure everything is correct on the 1003 mortgage loan application. The loan officer will pull a tri-merger credit report on the mortgage loan borrower.
How Do Lenders Analyze Credit Reports in the Mortgage Process Leading to Clear-to-Close?
The mortgage loan originator must 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. The mortgage loan originator needs to review the credit report with the borrower to see if it is correct. Outstanding judgments, tax liens, or other public records not reported on credit reports will be discovered when lenders search national public records.
The Importance of Getting an Automated Approval Per AUS
The Mortgage Loan Officer will submit the completed mortgage application and 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 programs allowing 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. Loan officers must follow the following steps before issuing a pre-approval letter. Seeking an approve/eligible per AUS Findings. The mortgage loan officer will issue a pre-approval
With a solid pre-approval, mortgage borrowers can now shop for a home. The borrower hires a real estate agent and looks for a home. Homebuyers choose a home they want to purchase. The homebuyer will submit the executed real estate purchase contract to the loan officer. A mortgage processor then gets assigned to the file. The mortgage process leading to clear-to-close has started. The following paragraphs will cover the mortgage process leading to clear-to-close.
Processing Stage of Mortgage Process Leading to Clear-to-Close
The mortgage process leading to clear-to-close starts once the homebuyer submits the executed real estate purchase contract. The mortgage loan officer will request mortgage documents. Examples of mortgage documents required are two years’ tax returns, paycheck stubs, two years’ W-2s, 60-day bank statements, and bankruptcy papers.
The file is assigned to a mortgage processor. The mortgage package is reviewed by an assigned mortgage processor and prepared for underwriting. The mortgage package needs to be as complete as possible to avoid delays.
The mortgage processor will ensure all documents are legible, have no missing pages, and are labeled. The mortgage processor’s role is to make sure all documents are complete. If applicable, divorce decree, investment and retirement accounts, and other necessary paperwork.
Underwriting Stage of Mortgage Process Leading to Clear-to-Close
The mortgage underwriter is the most important person in the approval process. The mortgage underwriter is the person who approves or denies a mortgage loan application and issues a clear-to-close. The underwriter reviews and scrutinizes the mortgage loan package.
Makes sure borrowers and property meet mortgage guidelines and lender overlays. The underwriter’s job is to make 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 are other necessary inspections. Conditional approval is issued. Once conditions for conditional loan approval are provided to the underwriter by the mortgage loan processor, the file is reviewed for a clear-to-close.
Getting a Conditional Loan Approval Mortgage Process Leading to Clear-to-Close
The underwriter issues a conditional loan approval after feeling confident that the borrower meets all mortgage guidelines and lender overlays. The borrower must provide all conditions requested for the underwriter to issue a clear-to-close. The mortgage loan is approved contingent on all of the conditions issued by the underwriter that can be met. Such conditions include letters of explanation 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 issuing the clear-to-close. The second set of underwriting reviews is called QC Underwriting Review. It gets assigned to a senior underwriter. The underwriting manager double-checks everything and validates the original mortgage underwriter’s clear-to-close. The mortgage underwriter issues a clear-to-close once the QC Underwriting Review is passed.
Final Step of Mortgage Process Leading To Clear-To-Close and Closing
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 for the HUD.
The closing department assigns a closer. The closer prepares the closing docs and sends them to the title company
Cash-to-close is the amount of qualified cash you need to bring to the table. The closing disclosure is the Itemization of costs, fees, and funding breakdowns. All itemization of closing costs and fees are stated on the Closing Disclosure. The 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 lender will wire the funds once buyers and sellers sign all paperwork and the transaction closes. 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.