Timeframe And Steps To Clear To Close On Home Loans

This BLOG On Timeframe And Steps To Clear To Close On Home Loans Was UPDATED On June 30, 2017

Many mortgage loan borrowers often ask what the Timeframe And Steps To Clear To Close On Home Loans. Many have heard horror stories about taking over two plus months on steps to clear to close. Timeframe And Steps To Clear To Close On Home Loans should not take more than 30 days from the date borrowers have turned in their e-Disclosures and documents required to process loan for a home loan to close is the biggest question for first time home buyers

What Are The Steps To Clear To Close And How Long Does It Take?

A clear to close is when the mortgage underwriter signs off the mortgage loan application and deems it to prepare the closing docs and that it is ready to fund. A clear to close is the finish line prior to closing in the mortgage process. The timeframe and Steps To Clear To Close depends on each individual lender.

Most of my mortgage loan borrowers close their home loans in 30 days or less.

  • There are cases where it takes longer for a mortgage loan to close. 
  • For a mortgage loan to close in 30 days or less, I would need the cooperation of the mortgage loan borrower. 
  • I will explain how the mortgage process works and what it takes for mortgage companies in Chicago and lenders like myself to close in 30 days or less.

First Time Home Buyers

Whether a borrowers is a home buyer buying a home or homeowner needing a refinance mortgage, the Steps To Clear To Close is the same. The pre-approval stage of the mortgage process is the most important step.

  • The first step is the mortgage application. 
  • Mortgage Applicants need to complete a 1003.
  • The 1003 is a four page mortgage loan application.
  • The 1003 can be taken over the phone with a loan officer or borrowers can complete and submit it online.
  • The 1003 is a 4 page secured mortgage application where it asks income, debt, and asset. 
  • All information stated on the 1003 should be as accurate as possible.
  • Information on 1003 is verified with tax returns, W2s, bank statements, credit reports and other mortgage documents that borrowers provide.

Mortgage Process

Once mortgage applicants have completed their online mortgage application, the loan officer then pulls credit from the three credit reporting agencies.

  • The middle credit score is used.
  • If there are more than one borrowers, than the middle credit score of the lowest credit score borrowers will be used.
  • Once the loan officer reviews credit report and verify borrowers information, the next step is for the loan officer to submit the application and credit report to AUS.
  • AUS is the automated underwriting system for an official automated approval by Fannie Mae or Freddie Mac. 
  • The Gustan Cho Team has no lender overlays so the loan should be approved with an AUS Approval as long as the borrowers can meet the conditions stated on AUS.
  • Loan Officers should review borrowers 2 years tax returns, 2 years W-2s, and 30 days paycheck stubs prior to issuing pre-approval.
  • Credit Disputes and other credit tradelines should carefully reviewed prior to issuance of pre-approval letter.
  • Down Payment and closing costs funds should be verified prior to issuance of pre-approval letter.
  • With an AUS Automated Approval,  a pre-approval letter should be issued and pre-approved borrowers can start shopping for home. 
  • All this can be done in less than a day.

Mortgage Loan Approval Process Leading To CTC

Week One: Once a home buyer have found a home and entered into a real estate purchase contract, they need to send the executed contract to their loan officer.

  • Once loan officer receives all docs by borrowers along with executed real estate purchase contract, e-Disclosures will be sent out along with the Loan Estimate.. 
  • Once loan officer receives signed mortgage application along with requested documents like 2 years tax returns, 2 years tax returns, recent pay stubs, and recent bank statements the application is submitted to the opening and processing department and assigned a mortgage processor. 
  • The mortgage processor makes sure that all of the information stated on mortgage application matches the documents sent.
  • Mortgage Processors will order a verification of employment, do an IRS verification of tax returns, do verification of deposit, verification of rent, and make sure borrowers do not have overdrafts. 
  • The appraisal will be ordered by the mortgage loan processor. 
  • A good processor is to make sure the file is as complete as possible for the underwriter.
  • After the loan has been processed, it is then submitted for underwriting where a mortgage underwriter is assigned to the file.  
  • All of these tasks will be completed by the end of week one.

Week Two: A mortgage underwriter will be assigned to the mortgage loan application and will start underwriting the loan.

  • Mortgage Underwriters are the decision makers on a loan approval.
  • Underwriters are the people that issue clear to close.
  • Underwriters will go over the file with a fine tooth comb and make sure there are no discrepancies.
  • Third party national public records search will be done to make sure borrowers do not have any public records such as judgments, bankruptcies, foreclosures, short sales that is not reflecting on credit report.
  • If the appraisal is done, the underwriter will review it.
  • If the appraisal is not done, the underwriter will condition on the conditional loan approval.
  • The appraiser should contact the seller’s agent and make an appointment to schedule the physical site appraisal by the end of week two. 
  • Once a mortgage underwriter sees the borrowers is qualified, a conditional loan approval will be issued.

Week Three: On week three is when we should be getting the appraisal report.

  • After the underwriter issues a conditional loan approval,  file goes back to the mortgage processor.
  • Processor will clear conditions and re-submit file for clear to close.
  • If everything is cool with the appraisal, the underwriting department is at work again and  mortgage file will be review for a final review.
  • If all conditions are met including the appraisal, the mortgage underwriter will issue a clear to close.

Week Four: This is when we get a clear to close and the mortgage lender prepares all of your mortgage documents.

  • The processor will contact the insurance agent to make sure that the new home is properly insured.
  • The processor and closing department will set up the time and place of the real estate closing.

Delays In Mortgage Loan Closings

The above scenario is a typical 30-day mortgage loan application process which is much like all Chicago mortgage companies.

  • Delays often do happen in the mortgage process. 
  • Delays on a mortgage loan to close comes in when documents are missing, employment of verification get delayed, explanations are missing, or an appraisal comes in too low.

If a mortgage loan borrower is prepared with all of the required documents and cooperates with his or her mortgage broker, a mortgage loan should close in 30 days or less.  Unfortunately, many times a mortgage loan closing does get delayed due to unforseen circumstances.

Borrowers needing to get qualified for a mortgage or need more information on this topic, please call us at 1-800-900-8569 or email us at gcho@gustancho.com.

Gustan Cho, NMLS ID 873293

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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