The mortgage loan process may seem far from simple. There’s a lot that happens between your initial consultation to your loan being funded. But we’ll walk you through it—and with full transparency.
We’ll explain every step of home loan processing, including a breakdown of all associated costs and fees. You’ll know exactly what you need to submit and when, and exactly where your loan is throughout processing. And if you ever feel you’re lost— just contact us! We understand that choosing a mortgage is the biggest financial decision of your life, and we’re committed to making the process as seamless, friendly and financially valuable to you as possible.
Here are the six major milestones youll reach during loan processing and what’s happening at each stage of the process.
Buying a home is likely one of the biggest financial decisions you’ll ever make. While it can be an exciting process, it can also feel overwhelming, especially when it comes to securing financing. Getting to the final approval stage of your home loan application signals you’re in the home stretch. But it’s not quite time to pop the champagne. Let’s break down everything you need to know about getting final approval and closing out your home loan process.
What is Final Approval?
Final approval, also known as “clear to close,” means your mortgage underwriter has signed off on your loan application and you’ve satisfied all of the lender’s requirements. This is the green light that you’ve been fully approved for financing.
Reaching this stage is a huge accomplishment, but keep in mind it doesn’t necessarily mean you’re 100% cleared to close on your home just yet. There are still a few final steps the lender must take before they can fund your loan.
The Difference Between Conditional and Final Approval
Oftentimes, borrowers receive a “conditional approval” before getting full clearance. This means the underwriter has reviewed your application but still needs a few additional documents or clarification before issuing final approval.
Some common conditions include
- Providing updated bank statements or paystubs
- Submitting gift letters for any monetary gifts used for your down payment
- Verifying you have secured homeowners insurance
- Explaining any discrepancies in your application, like large deposits or payments
Think of conditional approval as the “almost there” stage. Once you satisfy the underwriter’s list of conditions, they will issue a clear to close.
What Happens After Final Approval is Issued?
You’re nearing the finish line, but final approval doesn’t mean you’re completely in the clear. Here are the key things that still need to happen
Final Verification of Income and Employment
Even after final approval, most lenders will verify your income, assets, and employment one last time right before closing. This helps ensure nothing major has changed since underwriting reviewed your application.
Review of Closing Disclosure
At least three business days before closing, you’ll receive a Closing Disclosure outlining your final loan costs. Compare this closely to the Loan Estimate you received at application to catch any discrepancies.
Signing of Final Loan Documents
On closing day, you’ll review and sign the final loan documents. This includes your mortgage note, deed of trust, and any state-required disclosures.
Delivery of Down Payment and Closing Costs
You’ll need to deliver certified funds covering your down payment and closing costs. For wire transfers, confirm instructions beforehand to avoid delays.
Final Loan Funding
The lender will review your signed documents and may re-pull your credit before releasing funds. Once funded, you’ll get the keys and can move into your new home!
Top Tips for Retaining Final Approval
Because the lender still needs to take a few final steps after issuing final clearance, it’s crucial not to jeopardize your approval status. Here are some key tips:
Avoid major purchases or changes to your finances. Big purchases that show up on your credit or drive up your debt-to-income ratio could cause problems.
Don’t open new credit accounts. New credit activity can impact your credit score and eligibility.
Maintain your current employment. Job changes could raise red flags with underwriting so close to closing.
Keep your rate lock intact. Make sure your rate lock doesn’t expire to avoid having to lock a new, potentially higher rate.
Respond promptly to lender requests. Quickly provide any additional documents to avoid slow downs.
Review Closing Disclosure closely. Verify your final costs match up with your Loan Estimate.
Following these best practices will help ensure you coast smoothly from final approval to funded loan.
What to Do If Your Final Approval is Revoked
On rare occasions, a lender may need to pull back final approval if they uncover an issue in those last underwriting checks. Here’s what to do if this happens:
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Contact your loan officer immediately. Discuss the reason for the change and find out what needs to happen to regain approval.
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Act quickly to resolve any issues. If it’s something within your control, like providing additional paperwork, handle it right away.
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Consider requesting an exception. For example, if your credit score dropped slightly, ask if the lender is able to make an exception.
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Be prepared to delay closing. Revoked approval will likely push back closing, so notify your real estate agent.
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Know your rights. Familiarize yourself with the Home Loan Toolkit from the Consumer Financial Protection Bureau so you understand when a lender can and cannot change loan terms.
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Be persistent. Keep asking questions and speaking to supervisors until you get satisfactory answers.
While rare, revoked approvals do happen. Stay in close contact with your lender and act speedily to get back on track.
What a Final Approval Means For Your Interest Rate
Barring any major credit or employment changes, your interest rate should remain intact once you have final clearance. But here are some scenarios where your rate could still change:
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Your rate lock expires before closing. Avoid this by getting a longer lock period.
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You decide to change loan programs, like going from FHA to conventional financing.
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The home appraises for less than the purchase price, altering your LTV ratio.
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Underwriting can’t verify key details like your income, affecting your debt-to-income ratio.
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You opt to change the loan term or down payment amount.
The takeaway is interest rates can still fluctuate even after final approval. Locking in your rate as far ahead of closing as possible is key.
Are You Fully Approved After Funding?
Once the lender releases the loan funds and you close on the home, are you in the 100% clear? Technically yes, but the lender still reserves the right to call your loan due and payable if they uncover fraud or misrepresentation during the lending process.
Instances of this are extremely rare, but it underscores the importance of providing accurate and truthful information from application to funding.
Celebrate Making it to Final Approval!
Achieving final clearance is an exciting milestone in your home buying journey. While a few tasks still remain, you’re mere days away from closing at this point.
Stay the course by avoiding any last minute changes and responding promptly to lender requests. If you face any hiccups, act quickly to get back on track.
Once you get the keys in your hand and the loan funds, it’s finally time to pop the champagne and celebrate your new home. Enjoy the rest of the journey!
What do underwriters look at?
In addition to the loan file submitted by processing, the Underwriter examines:
- The completed appraisal report
- Credit report
- Pay stubs
- W-2 forms
- Bank statements
- Property tax statements
- Mortgage statements
- Homeowners insurance quote
- Existing debt
- Documentation of assets like stocks, bonds, securities and real estate holdings
Loan is Clear to Close
“Clear to Close” means the Underwriter has signed-off on all documents and issued a final approval. You meet all of your lenders’ requirements to qualify for a mortgage, and your mortgage team has been given the green light to move forward with your home loan.
When you reach this stage of the mortgage process, your lender will send you a clear to close letter along with a copy of the Closing Disclosure (CD). The CD is the standardized document that details the finalized terms for the loan, including a breakdown of all closing costs and fees. You won’t receive the Closing Disclosure until you’ve been cleared to close.
You’re in the home stretch now, but there’s still work to be done behind the scenes: The lender will schedule your closing and review the CD to ensure every cost and contingency has been incorporated before heading to the closing table.
What Happens After an Underwriter Approves a Home Loan?
FAQ
What is final approval on a mortgage?
Can mortgage be denied after final approval?
How long before closing is final loan approval?
What do the underwriters check for final approval?
What does final approval mean for a home loan?
Final approval Congratulations, your home loan is approved. This typically means your loan is just days away from closing. At this stage, your application has been fully processed and vetted by underwriting and you have met all the requirements of obtaining a home loan.
What happens after a loan application is approved?
After your loan application is approved, there are several important steps to follow before you can officially become a homeowner.Let’s break it down: 1.**Figure Out What You Can Afford**: Before you
What happens after mortgage approval?
After you receive final mortgage approval, you’ll attend the loan closing (signing). You’ll need to bring a cashier’s or certified check for your cash-to-close or arrange in advance for a wire transfer. Find your best mortgage rate. Start here
What happens if you get final approval from a mortgage underwriter?
Achieving final approval from the mortgage underwriter is a big deal — but it’s not quite time to celebrate. You’ll go through a few more steps before you get the keys to your new place. The lender has to double-check your income and employment. And you still have to sign final documents and pay closing costs.