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
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?
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
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.