Tips To Fast Mortgage Clear To Close And Closing On Time

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Tips To Fast Mortgage Clear To Close And Closing On Time

This BLOG On Tips To Fast Mortgage Clear To Close And Closing On Time Was Written By Michael Gracz of Gustan Cho Associates

A mortgage clear to close is when the lender has signed off on the mortgage loan. The lender is ready to send the closing documents out to the title company and fund the loan so home buyers can close on their home.

  • The Clear To Close is also referred to as CTC
  • There are tips to fast mortgage clear to close that we will cover on this article
  • The mortgage process starts with the applicant applying for a loan, the loan officer running credit and pre-approving borrower after he or she deems the borrower fully qualified
  • The loan officer then collects all necessary documents from borrowers such as the following:
    • two years tax returns
    • two years W2s
    • most recent paycheck stubs
    • sixty days bank statements
    • asset documents
    • IRA accounts
    • 401k account
    • social security awards letter
    • pension award letters
    • bankruptcy paperwork if applicable
    • foreclosure paperwork if applicable
    • divorce paperwork if applicable
    • short sale paperwork if applicable
    • any other documents pertaining to the mortgage loan applicant’s income, liabilities, and assets

Tips to fast mortgage clear to close is submitting all the necessary paperwork the right way the first time around.

Sloppy Mortgage Application Package Will Delay The Mortgage Clear To Close

The most common reason why there are delays in mortgage clear to close is due to the mortgage loan application package being submitted incomplete.

  • Good processing of the paperwork prior to submission to the underwriter is key
  • Example of sloppy document submission is if borrower had a bankruptcy, the mortgage processor is not submitting all of the paperwork of the bankruptcy and just the discharge papers
  • Mortgage underwriters require all pages of the bankruptcy filings as well as the discharge paperwork
  • Same goes with the divorce papers
  • Need to submit all pages of the divorce decree and not partial
  • Same with alimony, child support
  • Borrowers with social security income need to submit the social security awards letter
  • Those with pension income need to submit the pension awards letter
  • Not just a copy of pension check but full awards letter
  • Renters with verification of rent, do not just submit lease with landlord
  • Need to provide 12 months canceled checks
  • Or 12 months bank statements showing the funds of rent leaving bank account and transferring to landlord’s bank account
  • Need verification of rent form signed and dated by landlord
  • VOR is processed by mortgage processor
  • VOR FORM provided by lender to property management company that renter is renting from a professional property management company can be used in lieu of 12 months canceled checks and/or bank statements

High Debt To Income Ratios

High debt to income ratios is one of the most common reasons for a mortgage loan denial.  Borrowers with borderline debt to income ratio caps, make sure the loan officer gives borrowers a Plan B.  Plan B’s can be having a non-occupant co-borrower on stand by or having to pay down or having to pay off all of their credit card balances. Even having to put more money down for down payment to reduce mortgage loan monthly payments.  It can also be requesting a higher sellers concession from the seller to buy down mortgage rates to reduce monthly mortgage payments.  Changing the loan program from a fixed rate mortgage loan to an adjustable rate mortgage loan can also reduce interest rates which in turn lower the monthly mortgage payments.

  1. Bennie Chukwurah says

    What is a safe place to be with dti?

    1. Gustan Cho says

      For conventional loans, the maximum debt to income ratios allowed to pass automated approved per Automated Underwriting System is 45% debt to income ratio. For FHA Loans here are the rules:
      1. If your credit scores are under 620 FICO, maximum debt to income ratios are capped at 43%.
      2. If your credit scores are 620 FICO or higher, your debt to income ratios is capped at 56.9%.

    2. Gustan Cho says

      Bennie,
      Also, USDA Loans cap debt to income ratios at 41% and jumbo mortgages caps on debt to income ratios are normally capped at 40%.

    3. Gustan Cho says

      Here is a mortgage blog article post that I have written and published on http://www.gustancho.com on Solutions To High Debt To Income Ratios that may help you

      http://gustancho.com/debt-to-income-ratio-4

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