What Are TBD Property Mortgage Approvals By Lenders

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What Are TBD Property Mortgage Approvals By Lenders

This BLOG On What Are TBD Property Mortgage Approvals By Lenders Was UPDATED On February 14th, 2018

The traditional way of going about in getting a mortgage pre-approval is to contact a mortgage lender to get qualified and pre-approved.

  • The pre-approval is not an official approval
  • Pre-Approvals is by no means a guarantee that mortgage loan will get approved
  • A pre-approval is issued when applicants complete a 1003 four page mortgage application
  • Mortgage loan originator will review the mortgage loan application
  • Loan officer will run a tri-merger credit report and evaluate credit scores

Automated Underwriting System

  • The mortgage loan originator will then submit mortgage file along with credit report to Automated Underwriting System
  • There are two different versions of AUS
  • Either Fannie Mae’s Underwriting System for an approve/eligible per DU FINDINGS or Freddie Mac’s Automated Underwriting System for an approve/eligible per LP FINDINGS
  • Once applicant gets an approve/eligible many loan officers will then be issued a pre-approval letter
  • Borrowers then go shopping for a home
  • Shopping for a home can take as little as a day or several weeks to even longer
  • Once buyer gets a home they really like, they enter into a real estate purchase contract
  • Once mortgage loan originator has the purchase real estate contract is when he or she can officially start processing mortgage application and the mortgage approval process starts

Mortgage Approval Process

The traditional mortgage approval process starts once home buyer enters into a real estate purchase contract. Both parties, the buyers and sellers, sign the real estate purchase contract.

  • Once home buyers submit the real estate purchase contract, the mortgage loan originator will start the mortgage application and mortgage disclosure package which borrowers must acknowledge 
  • Borrowers will also get a list of items that the mortgage lender will require such as the following:
    • Two years tax returns
    • Two years W-2s
    • 60 days bank statements
    • Recent paycheck stubs
    • Bankruptcy documents if applicable
    • Foreclosure documents if applicable
    • Deed in lieu of foreclosure documents if applicable
    • Short sale HUD settlement statement if applicable
    • Child support payments
    • Divorce decree
    • Other mortgage documents that pertains to mortgage loan application process
  • Borrowers will be assigned to a mortgage loan processor
  • Processor makes sure that every information stated on mortgage application is correct
  • They will also go over all the documents provided is accurate and complete
  • The mortgage loan processor will then submit mortgage package to the underwriting department
  • Mortgage loan underwriter will start underwriting mortgage application
  • The underwriting process normally take two to three days
  • If everything goes well, a conditional mortgage loan approval will be issued
  • Will get clearance to order an appraisal on the property
  • Up to this period, everything normally goes very smooth
  • The conditions is what takes time
  • The mortgage underwriter will condition items needed to get a clear to close
  • A clear to close is when the mortgage lender is ready to fund the mortgage loan and a closing date can be scheduled

Mortgage Conditions

Examples of mortgage conditions are the following:

  • Updated paycheck stubs
  • Update bank statements
  • Verification of rent
  • Verification of employment
  • Letters of explanation for credit inquiries
  • Letters of explanations for derogatory credit
  • Letters of explanations for bankruptcy
    • Foreclosure
    • Deed in lieu of foreclosure
    • Short sale
  • Other letter of explanations and supporting documents the mortgage loan underwriter requests

Clear To Close Of The Mortgage Process

Clear To Close or CTC is when the underwriter signs off on the loan and the lender is ready to prep closing docs and fund the loan.

  • Once all mortgage conditions have been met, the mortgage loan processor will submit to the mortgage loan underwriter
  • The goal here is to get a clear to close once the mortgage loan underwriter has reviewed the conditions
  • However, there are cases where the mortgage loan underwriter will come back with additional mortgage conditions that has not been requested on the initial conditional mortgage loan approval
  • This is when delays in mortgage closings happens
  • Every time there are mortgage conditions requested by the mortgage loan underwriter, it will take anywhere between 24 to 48 hours and even sometimes longer for the mortgage loan underwriter to clear conditions
  • There are times where borrowers submit conditions where processor can pick up the phone and speak to the mortgage loan underwriter
  • They can clear the conditions on the spot but many times, this is not the case
  • It is very important with a conditional mortgage loan approval to submit all of the conditions that underwriter is requesting to them all at the same time
  • Hope no other condition request comes back from the underwriter

TBD Property Mortgage Approvals Underwriting Process

TBD Property stands for To Be Determined PropertyAll pre-approvals issued by The Gustan Cho Team at USA Mortgage are TBD Property Mortgage Approvals.

  • TBD Property Mortgage Approvals underwrites is when lenders processes and underwrites mortgage application without a real estate purchase contract
  • Mortgage Underwriters issue formal conditional mortgage approval contingent on a real estate purchase contract and a appraisal
  •  TBD Property Mortgage Approvals are not offered by all lenders
  • Only a few lenders are willing to do TBD Property Mortgage Approvals
  • The TBD Property Mortgage Approvals is the same process as the traditional mortgage application
  • Mortgage approval process discussed in the earlier paragraph but a subject property is not required
  • The great advantage of  TBD Property Mortgage Approvals underwrites is borrowers will have their mortgage approval process started and completed before entering into a real estate purchase contract
  • The TBD Property Mortgage Approvals process is no different than the traditional mortgage approval process
  • When borrowers get a conditional mortgage approval, we will be working with getting mortgage conditions back to the underwriter for a clear to close
  • Formal mortgage loan approval with a clear to close subject to a real estate purchase contract and a real estate appraisal

Advantages Of TBD Property Mortgage Approvals

The main advantage of TBD Property Mortgage Approvals is that borrowers get a jump start on processing and underwriting  loan application prior to entering into a real estate purchase contract. Borrowers do not have to worry about a potential mortgage loan denial.

  • TBD Property Mortgage Approvals are an excellent mortgage loan program for borrowers who are self-employed
  • Or borrowers with prior bad credit or low credit scores as well as those with high debt to income ratios
  • Many self-employed mortgage loan borrowers get their mortgage loan applications denied at the last minute because of massive income deductions
  • Borrowers who have bad credit or higher debt to income ratios often stress during mortgage process:
    • Often times they need to restructure their mortgage loan application
    • Either paying down debt
    • Or adding a non-occupant co-borrower to their mortgage loan application
  • If this is the case, it can become a major issue if the self employed borrowers
  • Many borrowers stress because they often have strict purchase deadline closing date to meet
  • However, if this situation happens on a TBD Property mortgage underwrite, the time issue is not a big deal
  • The same case scenario applies to borrowers with bad credit
  • Or low credit scores as well as those mortgage loan borrowers with high debt to income ratios

Qualifying For TBD Property Mortgage Approvals

All pre-approvals issued by The Gustan Cho Team at USA Mortgage are TBD Property Mortgage Approvals. All pre-approvals are fully underwritten and signed off by our underwriters at USA Mortgage. This is the reason why we close 100% of all of our pre-approvals unlike our competitors. Home Buyers and Homeowners who need to qualify for mortgage with a direct lender with no overlays on government and conventional loans can contact us at The Gustan Cho Team at USA Mortgage at 262-716-8151 or email us at gcho@usa-mortgage.com. We are available 7 days a week, evenings, weekends, and holidays.

Gustan Cho

www.gustancho.com

  1. Gustan Cho, NMLS 873293 says

    With TBD PROPERTY UNDERWRITING MORTGAGE APPROVALS, the loan is fully underwritten and signed off by our underwriters at USA MORTGAGE, a division of DAS ACQUISITION COMPANY NMLS 227262

    Gustan Cho NMLS 873293

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