Timeline From Pre-Approval To Clear To Close On Mortgages

This article is about Timeline From Pre-Approval To Clear To Close On Mortgages

The mortgage approval process starts with the pre-approval phase. Timeline From Pre-Approval To Clear To Close should not be more than 30 days. A home buyer goes to a mortgage lender first to see the maximum amount of loan they can qualify for. Once the mortgage loan officer determines the maximum borrower qualifies, the home buyer can then consult a realtor.

Armed with a solid preapproval, buyers can start looking for a home within the range that the home buyer qualifies for. An experienced loan officer can help borrowers qualify for a mortgage and loan program after reviewing the home buyer’s income, debt, assets, credit, and credit history. Loan Officers should thoroughly qualify borrowers prior to issuing pre-approval letters. All pre-approvals at Gustan Cho Associates Mortgage Group are fully pre- underwritten and vetted prior to being issued. This is why Timeline From Pre-Approval To Clear To Close is never passed 30 days at Gustan Cho Associates Mortgage Group.

Timeline From Pre-Approval To Clear To Close With Self Employed Borrowers

Timeline From Pre-Approval To Clear To Close With Self Employed Borrowers

For self-employed borrowers or 1099 wage earners, most loan originators will not issue a pre-qualification letter until the file has been fully underwritten and signed off by mortgage underwriters. Timeline From Pre-Approval To Clear To Close on self-employed borrowers may take up to 45 days. Loan officers need to fully review the following prior to proceeding self-employed borrowers are moved to processing/underwriting. Two years of tax returns to make sure that the borrower has a positive income. Make sure borrowers did not write off too much on their tax returns.

The loan officer will also ask about the down payment and closing costs. Down payment and closing funds need to be sourced. Homebuyers with limited assets and just enough for the down payment need to be carefully reviewed so there is no stress at the last minute.

For borrowers who cannot afford to pay closing costs, the loan officer will ask the home buyer to make sure that they get a seller’s concession towards the home buyer’s closing costs. In the event, if the seller is not willing to give a seller’s concession towards a home buyer’s closing costs, a lender can offer borrowers’ lender’s credit towards closing costs in lieu of a slightly higher interest rate. Once a pre-approval is issued, the home buyer can consult with a realtor and start shopping for a home.

Mortgage Application Process

Once the home buyer is issued a pre-approval and starts shopping for a home, the mortgage loan originator will request needed mortgage documents.

Here is the list of documents that will need to be provided: Documents Required To Process Mortgage.

  • The items on this list should not be sent piecemeal.
  • It should be accumulated all at once and provided to the loan officer.
  • While the home buyer is shopping for a home, the mortgage loan originator can start reviewing the documents and start processing the mortgage loan application.
  • Once the home buyer gets an executed purchase real estate contract, the loan officer will prepare a formal mortgage application and disclosures for borrowers to sign and send back.
  • The signed mortgage application and disclosures then get assigned to a mortgage processor.
  • It takes no more than 24 to 48 hours to process the mortgage package and submitted to underwriting.
  • This is where the delay comes in with larger mortgage lenders.
  • Many banks, credit unions, and larger mortgage companies take them up to two weeks to process a mortgage loan application.
  • Loan Officers should make it a point to get a mortgage application package processed in 24 hours.
  • Once the package is submitted to underwriting, the turnaround time for a conditional approval is 24 hours to 48 hours.
  • After we get the conditional approval, the processor orders the appraisal.
  • This normally takes between 3 to 5 business days.
  • A rush appraisal can be ordered and will take 24 to 48 hours.
  • There is normally a $100 extra fee for a rush appraisal.
  • While waiting for the appraisal to come back, the mortgage processor requests conditions from borrowers.
  • By the time the appraisal comes back, all conditions will be at the mortgage processor’s desk to submit along with the appraisal for final review and a clear to close.

Once the appraisal and final c.onditions are submitted for the clear to close, it normally takes 24 to 48 hours for underwriters to review the final conditions and issue a clear to close Once we get clear to close, it takes 24 hours to prepare docs, including final HUD, and wire and to close and fund the mortgage loan.

Why Do I Hear Horror Stories About Mortgage Loans Closing In 2 To 3 Or More Months?

Horror Stories About Mortgage Loans Closing In 2 To 3 Or More Months

There is no reason why a mortgage loan cannot close in 30 days or less. Timeline From Pre-Approval To Clear To Close should never go beyond 30 days or more:

  • There are unexpected delays where Timeline From Pre-Approval To Clear To Close goes beyond 30 days
  • But 90% of all of borrowers Timeline From Pre-Approval To Clear To Close is less than 30 days
  • As mentioned earlier, banks, credit unions, and larger mortgage companies have a system and do take longer
  • Once a file is ready to be processed, it goes to a bin and gets in line for the processor to get to it
  • First come, first serve
  • If there are missing documents and/or items, it gets kicked back until the item is provided
  • Goes back on the bin again on a first come first serve basis
  • Sometimes, this can take several days to a week or more
  • The same process when it goes to underwriting
  • If an underwriter sees that several pages are missing from the mortgage package, then it gets kicked back to processing
  • The processor will alert the loan officer which in turn notifies borrowers
  • Once the borrower provides the necessary information, then it gets submitted to the processor which in turn gets submitted to the underwriter where it will lay there on a first come first serve basis
  • This is how a mortgage loan closing gets delayed

Mortgage Loan Closing Delays

There are other situations where it is beyond anybody’s control where a mortgage closing can get delayed. There are situations where the appraisal comes in at a lower value than the purchase price. In cases like this, an appraisal rebuttal needs to be done and that takes time. If the appraisal rebuttal is not successful, both the home buyer and home seller need to go back to the negotiation table and renegotiate the purchase price.

There are times where providing conditions by the home buyer can take longer than expected. For example, if borrowers have no copies of bankruptcy, foreclosure, or divorce paperwork and ordering them takes time. The mortgage approval process is at a complete halt until the documents can be provided.

Timeline For Clear To Close: 30 Days Or Less

Timeline For Clear To Close

For a mortgage loan application to get a clear to close in 30 days or less, borrowers need to chip in and make sure when conditions are requested, that they provide it in a timely manner. The list of items requested for the first go-around should be as complete as possible. If the processor does not turn in all of the required documents the first go around, the mortgage underwriter will condition it on the conditional approval which means delays can occur. Most seasoned veteran mortgage processors will not submit a mortgage file to underwriting until every single document has been provided by borrowers.

There are many instances Gustan Cho Associates Mortgage Group has closed mortgage loans under 30 days. Many times 10-day closings are not unheard of especially if we get borrowers transferring FHA and/or VA mortgage loans from a different lender along with the completed home appraisal.

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Comments: 2

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  • Mr. Cho,
    My wife and I are attempting to purchase a home using a VA loan using Mortgage Solutions Financial http://www.mortgagesolutions.net. We received a letter of pre-approval and found the home of our dreams. We listed our home for sale and it sold sight unseen within 24 hours. Our offer on the new home was accepted. We set a closing date of 45 days. In this time we provided every conceivable piece of information available to our lender in a timely fashion and maintained constant communication. Throughout the process the lender failed to communicate with us in a timely fashion. Then the week of September 15th, two weeks prior to closing, we were informed the VA underwriter had discovered I had a defaulted Federal Student Loan from years prior. With great effort I received a sizeable “Bonus” from my employer and immediately paid the debt. The lender provided us with a deadline to submit the clearance letter to keep on track for closing. A deadline that we made. Now a few days before close, the lender notified us that there could possibly be a delay. Specifically – Please be reminded that due to derogatory credit in the past 12 months, overall credit risk and lack of reserves/ability to save, we are required to have management second-level review and approval once all conditions are reviewed by the VA Underwriter. Our realtor reached out and was able to contact one of the many vice presidents at the company. She informed our realtor we should not worry as we had already signed our Closing Disclosure on September 18th and everything should be fine. But of course today more issues arose. Which I’m quickly learning is likely due to “overlays” implemented by the lender themselves.
    I had mentioned last week that we would need an extension if we did not get up for final review yesterday morning due to internal timelines, both when we spoke and in the attached email. Once we are through underwriting we can better advise on estimated closing as we still need 2nd level review.

    Again I would like to stress that this transaction is not a typical purchase transaction. It is a very difficult VA manual underwrite due to the buyer’s high credit risk, lack of reserves, and mismanagement of assets.

    You are more than welcome to call the Regional Vice President, Jayda Matekovic at 970-208-1703 she has been cc’d on most all emails – I have also asked her to give you a call.
    To be honest, our financial history isn’t perfect but the more information I read and learn about VA lending guidelines I suspect we might be qualified. One of my credit scores is a 638 and my wife is 607. But now I have learned the VA doesn’t look directly at credit scores, but our lender does. My wife has maintained two VA mortgages with Mortgage Solutions and has an outstanding payment history. My wife has stable employment as a project manager for a government contractor that works on the local Air Force base making $76,500 a year. I work as a leak detection technician with a base salary of at least $57,600 a year. We have married a few months ago and do not have any money in savings. I’m assuming that’s the lack of reserves the lender is mentioning. We also both recently overdrafted our bank accounts before our wedding. Which we promptly repaid the following paycheck and then wrote letters of explanation.

    We had explained a plan to our lender where we were going to take proceeds from the sale of our current home and pay six months’ worth of mortgage payments and pay off several small debts to decrease our monthly debts.

    Throughout the process we have not once spoken to the underwriter or our primary lender. It wasn’t until my realtor got involved that the V.P. reached out. Only to give us good news, and then two hours later tell us that she gave the underwriter an hour to either approve the loan or deny it all together. We e-mailed the lender stating we would agree to pushback closing to the 12th and simply received a thank you. The realtor and my wife have reached out repeatedly to the company with no response.
    It’s frustrating when you can’t get a simply yes or no after you’re pre-approved and jump through every single hurdle presented. So now we’re looking at closing on the sell of our current home this Friday. With everything already packed up, utilities set to be transferred, two children, two dogs, and two full times jobs but no idea where we will be living this weekend.

    I understand I’m at the mercy of the lender as they haven’t done anything illegal or even out of the norm. After reading reviews on the internet this specific lender is notorious for doing this. If they make getting approval for a loan the government wants veterans to receive I’m afraid of all the other things that might happen. Will they charge an absurd amount for fees during closing? Hold money that should rightfully return to us?

    In conclusion, thank you for your website providing information about the whole process and the additional “overlays” implemented on the lender side. If our loan is denied by the lender, I know the process isn’t fast, but I would be interested in your services.


    Justin Milligan

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