Average Mortgage Process Timeline

What Is The Mortgage Process Timeline From Application To Clear To Close?

There is a mortgage process timeline. The mortgage process is a process and there are steps in the mortgage process. Once you have decided to get a mortgage loan, whether it is a home purchase or refinancing your current home, there are several stages in the mortgage process and it takes time. The first step in the mortgage process is getting pre-approved. The pre-approval stage of the mortgage process is the most important stage of the whole mortgage process. The main and most common reason of mortgage loan denials is because the mortgage borrower was not properly qualified and the pre-approval of the mortgage borrower was not thoroughly done by the mortgage loan originator. There are many moving parts in the pre-approval process and most pre-approvals will take some time. Just obtaining a mortgage borrower’s credit scores and having the mortgage borrower complete a formal mortgage loan application is not sufficient in getting a mortgage loan borrower pre-approved. The mortgage loan originator needs to thoroughly review the borrower’s credit report, review not just the paycheck stubs but also do a full analysis of the mortgage borrower’s income tax returns as well as make sure that they analyze the unreimbursed expenses of the mortgage borrower. If the borrower is self employed, the mortgage loan originator needs to carefully review both the borrower’s corporate and individual income tax returns. If the mortgage borrower has multiple jobs and irregular income such as part time jobs, bonus income, or other income, the mortgage loan originator needs to make sure that the mortgage borrower had a two year work history and make sure that the income and job is likely continue for the next three years. A verification of employment is strongly recommended for mortgage borrowers who have questionable or irregular hours and/or income. The mortgage loan originator should interview the borrower and make sure that they go over the borrower’s credit report and make sure that all line items on the borrower’s credit report is correct and if there are any derogatory credit items such as public records like judgments and tax liens are not reporting on the borrower’s credit report. Public records such as judgments or tax liens that are not reporting on the borrower’s credit report will be revealed when the mortgage lender does a third party national public records search such as DataVerify and/or Lexis Nexis. Public records such as bankruptcies and foreclosures should be carefully reviewed and the actual dates of the bankruptcy and/or foreclosure should be analyzed by the loan officer and not just rely on the borrower’s credit report. Credit reporting agencies are not always correct and errors are made on mortgage loan borrower’s credit reports. There are mandatory waiting periods to qualify for a home loan after a bankruptcy and foreclosure.  With foreclosures and deed in lieu of foreclosures, the waiting period clock does not start until the date where the deed of the property has been transferred out of the homeowners name and into the name of the mortgage lender and/or the date of the sheriff’s sale. Many folks think that the waiting period starts when the homeowner turns in the keys to their property to the mortgage lender and that is not the case. Most pre-approvals can be issued as soon as the mortgage loan applicant can provide at least two years tax returns, two years W2s, most recent paycheck stubs, and other pertinent documents relating to the mortgage loan officer’s ability to render a decision. The quicker a mortgage loan borrower can provide the necessary documents to the mortgage loan officer, the pre-approval letter should be issued.

Mortgage Process Timeline: Processing

Once a home buyer is armed with a solid pre-approval letter, he or she can now go and enter into a purchase real estate contract. Once the home buyer gets a seller to agree on a home purchase offer, the home buyer will submit the real estate purchase contract to their mortgage loan officer. This is when the mortgage process timeline starts. The mortgage loan originator will request updated docs by the borrower such as updated bank statements and updated paycheck stubs and will email out the mortgage loan disclosures and the Loan Estimate . Once the mortgage borrower acknowledges the mortgage loan disclosures and sign the wet docs, the mortgage file gets assigned to a mortgage loan processor. The mortgage processor will then make sure that the mortgage file is complete and get the file ready for submission to the mortgage company’s underwriting department. The mortgage file gets assigned to a mortgage loan underwriter where the underwriter will go over every aspect of the file and make sure that the mortgage borrower meets all of the mortgage lending guidelines. The processing of a mortgage file may take up to one week and depends on how fast the mortgage borrower gets documents that are requested by processor such as bank statements, child support payments, divorce decree, bankruptcy paperwork, foreclosure and/or short sale documents, and other pertinent information. The processor’s role is to make sure that the file is as complete as possible so the mortgage underwriter will come back with as little conditions as possible. A great processor will scrutinize a file and will make the mortgage underwriter’s job very easy and the underwriter will come back with very little amount of conditions. A mortgage underwriter normally can underwrite a mortgage file within 24 to 48 hours from the time the file is submitted by processing. The mortgage underwriter will then issue a conditional mortgage approval where there will be a list of conditions. Examples of conditions includes appraisal, updated documents, and other prior to funding conditions. Once the conditions are submitted back to the mortgage underwriter, the underwriter will then issue a clear to close. A clear to close, also often referred to as a CTC, is when the mortgage lender is ready to fund the mortgage loan and wire the funds to the title company to close on the home loan. The mortgage process timeline should take no later than 30 days from the day the mortgage borrower or borrowers submit all of the necessary docs and sign the mortgage loan disclosures. Delays in the mortgage process timeline does happen. Typical reasons for delays in the mortgage process timeline is due to the borrower not cooperating and not submitting the requested documents in a timely manner, home appraisal issues where the home appraisal does not come in at value and the lender needs to do an appraisal rebuttal, or other extraordinary reasons.


The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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