This BLOG On TBD Property Mortgage Approvals As Pre-Approvals Was UPDATED On January 31st, 2019
The traditional way of going about getting a mortgage pre-approval is to contact a 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
- The mortgage loan originator will review the mortgage loan application
- The 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 the 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 the 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 the homebuyer enters into a real estate purchase contract. Both parties, the buyers and sellers, sign the real estate purchase contract.
- Once homebuyers 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 of 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 pertain to the mortgage loan application process.
Borrowers will be assigned to a mortgage loan processor
- The processor makes sure that every information stated on a mortgage application is correct
- They will also go over all the documents provided is accurate and complete
- The mortgage loan processor will then submit a mortgage package to the underwriting department
- The mortgage underwriter will start underwriting mortgage application
- The underwriting process normally takes 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 are 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.
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:
- Deed in lieu of foreclosure
- Short sale
Other letters of explanation 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 underwriter will come back with additional conditions that have not been requested on the initial conditional loan approval
- This is when delays in mortgage closings happen
- Every time there are conditions requested by underwriters, it will take anywhere between 24 to 48 hours and sometimes longer to clear conditions
- There are times where borrowers submit conditions where the processor can pick up the phone and speak to the mortgage underwriter
- They can clear the conditions on the spot but many times, this is not the case
- It is very important with a conditional 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 Property. All pre-approvals issued by Gustan Cho Associates 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 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 applications 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 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 the 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 Loan Cabin Inc. are TBD Property Mortgage Approvals. All pre-approvals are fully underwritten and signed off by our underwriters at Gustan Cho Associates Mortgage Group. 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 a mortgage with a direct lender with no overlays on government and conventional loans can contact us at Gustan Cho Associates at 262-716-8151 or text us for faster response. Or email us at email@example.com. We are available 7 days a week, evenings, weekends, and holidays.