Steps Leading To Clear To Close And Home Loan Closing
This Article Is About Steps Leading To Clear To Close And Home Loan Closing
The mortgage process starts with the borrower submitting a mortgage loan application and getting qualified by a loan officer. After reviewing the borrower’s credit report, credit scores, income, documents, and getting an approve/eligible per automated underwriting system, the loan officer will issue a pre-approval. Armed with a solid pre-approval letter, the homebuyer will shop for a home. Once the homebuyer finds a home they want to purchase and enter into a real estate home purchase contract, that is when the mortgage process starts.
A mortgage processor will gather all the mortgage documents needed for the underwriter. The mortgage underwriter is the key person who decides whether or not the borrower gets approved for a mortgage. The mortgage underwriter is the person that issues the conditional loan approval. The underwriter clears conditions and issues the clear to close.
The clear to close is the final step of the mortgage process prior to the home closing. The clear to close is the ultimate goal for all parties involved, from the homebuyers, sellers, loan officers, processors, real estate agents, title companies, and other third-party professionals.
The Start Of The Mortgage Process
The clear to close is the ultimate step of the mortgage process. The CTC is the goal line. The CTC is when the mortgage underwriter signs off on the loan. The CTC is when the lender is ready to prepare the closing docs and wire the money to the title company.
There are certain steps leading to clear to close. The mortgage process starts with the pre-approval process. The borrower get qualified by a loan officer. The loan officers make sure borrowers meet the minimum credit score requirements. Furthermore, the loan officer needs to make sure the borrowers meet the debt to income ratio requirements on the particular mortgage loan program.
First Stage In The Steps Leading To Clear To Close And Home Loan Closing
- The borrower then gets a pre-approval letter from the loan originator
- Buyers go shopping for a home
- Once the home buyer decides on a particular home that he or she wants to purchase, they enter into a real estate purchase contract
- Once the buyers and sellers sign the real estate purchase contract, the contract is then submitted to the loan officer
- This is when the mortgage process begins
- The loan officer will gather all necessary docs such as two years tax returns, two years W2s, most recent paycheck stubs, two months bank statements, asset accounts such as 401k accounts and investment accounts, pertinent documents that
- Bankruptcy paperwork, foreclosure paperwork, short sale paperwork, divorce decree, child support paperwork, alimony paperwork, and other necessary paperwork needs to be provided by the borrowers
- Once all of the documents are collected, the loan officer will submit the whole package to the processing department
- A mortgage processor will be assigned to the file
- The mortgage processor will make sure that there are no missing items
- The mortgage process will make sure all documents are legible and labeled properly for the mortgage underwriter
- The processor will make sure all paperwork is updated such as having the most recent paycheck stubs and bank statements.
The mortgage processor will then submit the file to the underwriting department.
The Underwriting Step Of The Mortgage Process
After the mortgage process has the borrower’s file complete, labeled, and fully organized, the file is then submitted to the underwriting department of the lender. Mortgage underwriters will not waste any time if the file is not complete, there are missing pages, and/or not legible. Underwriters have a lot of files to underwrite per day and cannot be stuck in one file. Therefore, if a file is sloppy and not legible and/or has missing documents, it will get kicked back to the mortgage processor. If it is kicked back to the mortgage processor, the file gets in the back of the line for underwriting again. This can cause a delay in the mortgage process.
Getting a conditional loan approval will get delayed and the clear to close may get delayed. If the clear to close gets, the home loan closing can get delayed. This is why it is important for the mortgage processor to prepare the borrower’s file and label it accordingly prior to submitting it to the underwriting. Many experienced processors will not submit a file to underwriting unless every single piece of document is present. It may take a few days to get certain documents.
Experienced mortgage processors will wait until they get that document prior to submitting it to underwriting. Some processors will just submit whatever documents they have and have the mortgage underwriter condition the missing docs on the conditional loan approval. This is a bad habit and the last thing you want is a conditional loan approval with dozens of conditions. The fewer conditions on the conditional loan approval, the quicker the clear to close will be issued.
The Underwriting Process Of The Mortgage Process
A mortgage underwriter will be assigned to the mortgage file:
- The mortgage underwriter will go over the file
- Underwriters will make sure that the file is complete and meets all of the mortgage guidelines
- The underwriter will thoroughly review the borrowers’ credit, credit scores, credit history, income docs, asset information, and letters of explanations
- Once the mortgage underwriter feels comfortable with the applicant and sees that the borrower meets all guidelines, he or she will then issue a conditional mortgage loan approval
- The file then goes back to the mortgage processor
- It is the mortgage processor’s job to gather all the conditions that are requested by the mortgage underwriter
- The loan originator is notified of the conditions
- The mortgage processor with the help of the loan officer work together in getting the conditions
- Once the borrower submits all the conditions, the processor will submit the mortgage file back to the mortgage loan underwriter for a clear to close
- A clear to close is great news
- This is because it means the lender is ready to fund the loan and send the closing paperwork to the title company
Once the clear to close has been issued, the mortgage company’s closing department will contact the title company and make plans on a closing date. The closer of the mortgage company will prepare the docs and send them to the title company. At closing, once all closing docs have been signed and approved, the lender will wire funds. The homebuyer will get the keys and ownership changes hands.
The Clear To Close On The Steps Leading To Clear To Close
By this stage in the mortgage process, you are breathing a sigh of relief as you are in the final stages of the mortgage process. Congratulations, you have made it through the hard part! Once you got the clear to close, the following steps are taken:
- For borrowers and Loan Officers, receiving the Clear to Close is like music to your ears!
- Once you receiving the Clear to Close, the lender, realtor, and closing agent will work together to schedule a closing date
- The lender will work to prepare all the required documents required to be signed at closing
- After receiving your Clear to Close (CTC), there will be a series of quality control checks that take place
- Do not be alarmed if the QC process asks additional questions
- This is part of the process of ensuring that all the proverbial I’s are dotted and T’s are crossed, it is a formality to protect the lender
- Three days prior to closing, borrowers will receive a series of disclosures
- Final disclosures will outline all of your loan details and state your required cash to close
- Upon receiving these disclosures, it is important that you immediately acknowledge them as there are timing requirements for closing
- Prior to closing, you will prepare a Certified Check to cover your cash to close amount
- Borrowers will also be given instructions on what they need to bring to closing, which will likely be your certified check, driver’s license or state-issued identification, and your social security card
Congratulations on making it to this stage, you are within a few days of homeownership!
Starting The Mortgage Process With A Direct Lender With No Overlays
This article on Steps Leading To Clear To Close was written to inform our borrowers of the overall mortgage process. Gustan Cho Associates is a national mortgage company licensed in multiple states with no overlays on government and conventional loans. Over 75% of our borrowers at Gustan Cho Associates are folks who could not qualify elsewhere due to their lender overlays.
The Team at Gustan Cho Associates specializes in FHA, VA, USDA, Non-QM, Reverse Mortgages, FHA Rehab Loans, Conventional Loans, Jumbo Mortgages, One Time FHA and VA Construction Loans, Mortgage One Day Out Of Bankruptcy and Foreclosure, and alternative financing. Gustan Cho Associates has zero lender overlays on government and conventional loans. This holds true as long as the automated finding per Automated Underwriting System renders an approve/eligible, borrowers are set to go. This is because there are no FHA Lender Overlays. Over 75% of Gustan Cho Associates borrowers are folks who either got denied by another lender at the last minute due to one reason or another or due to their overlays.
A large percentage of Gustan Cho Associates borrowers have credit scores under 600 FICO. Many FHA lenders require higher credit scores due to their overlays. FHA, VA, USDA, Fannie, Freddie does not require borrowers to pay off outstanding collection accounts to qualify for these mortgages. High balance collection and charge-off accounts do not have to be paid off to qualify for home loans.
If you are in need of a national mortgage lender with no overlays on government and conventional loans, contact Gustan Cho Associates at 262-716-8151 or text us for a faster response. Or email us at [email protected] Gustan Cho Associates are also experts in non-QM loans. We have dozens of Non-QM wholesale lending partners. Our non-QM mortgage one day out of bankruptcy and foreclosure is one of our most popular non-QM loan programs. The team at Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays.