You’ve given the underwriter your social security number, provided bank statements and explanations for every deposit to your account over the last ten years, emailed a thousand pages of tax returns and W2s dating back to when you first entered the workforce, and now you’re being asked to provide a blood sample and promise your first born child (and you don’t even plan on having kids!), in order to be approved for a mortgage… what gives?!
If this sounds familiar, you’re not alone... The entire loan process can be rather confusing, all of the back and forth, trying to figure out where you are at in the process and wondering if you’ll ever actually get to close. In this week’s Q&A we will take a closer look at getting your loan through underwriting.
Question:
We have just been through the underwriting process. Our loan has conditional approval from the underwriter. We have turned in all of our conditions as of Friday. To be a little more clear, we have been back and forth with the processor to get exactly what the underwriter needs. We all feel confident that what we turned in should meet the final demands of the conditions.
How certain is it that we will pass through underwriting and move to the closing process, once the underwriter reviews what we submitted? My wife and I have been wondering if it’s pretty much a sure thing because we turned in everything that was asked for or if meeting the conditions is just what it takes to get it to the underwriting?Is there still a good chance that we may not get the loan?
Also, we have been using our credit card recently and my wife thinks it may hurt our chances of closing our loan. Any truth to this?
Answer:
The underwriter has completed the initial review of your loan application and issued a conditional approval along with a set of conditions that need to be satisfied before a final approval can be issued and you can move to the closing process. You have given all of the information and documents that were requested in order to satisfy these conditions and now the underwriter is reviewing everything. As long as the information provided to the underwriter is complete and does not raise further questions, a final approval will be issued. However, more often than not, additional information leads to additional questions.
For example; the underwriter requests a bank statement to verify you have enough money to pay for closing costs and the down-payment on your new home. You submita statement verifying that you have $75,000 in the account and on the transaction history there is a large deposit, that equals more than 50% of your monthly gross salary. When the underwriter reviews this they are going to issue a new condition asking you to explain and document where that money came from. And your loan will not receive a final approval until the new condition is satisfied.
I know that it can be frustrating from a borrower's perspective when you think you've given everything requested and then the underwriter comes back and asks you for additional documentation. But don't let those requests cause you any stress. The sooner you send the documents, the sooner you'll have a final approval.
It typically takes about 48 hours to get an updated approval once you've turned everything in. As long as the process doesn't drag on for weeks and you feel like your Loan Officer and processor are answering your questions and keeping you in the loop, you will be fine!
If the underwriter does come back with additional conditions, feel free to post them if they do not seem to make sense and I will gladly try to explain the reasoning behind each one!
With regards to using credit cards during the loan process - As long as you have not opened up a new credit card account and have only been adding to the balance of an existing credit card, it will not affect your loan.Lendersmonitor your creditduring the loan process to see if you've opened new accounts and acquired new debt, but they do not track the balances on existing revolving (credit card) accounts. For existing revolving accounts, the lender will use the payment and balance reported on your credit report when you initially applied for the loan, to determine your debt to income ratio.
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FAQs
Once all conditions have been met, the Loan Coordinator will send the file back to the Underwriter for a final review and approval. Next step: After the loan is approved, a Mortgage Professional will schedule the closing.
How long does final underwriting take after conditional approval? ›
How long does it take to get final approval after conditional approval? The good news is that once your loan has been conditionally approved, you're basically in the home stretch. That being said, your lender will likely need another 1–2 weeks to finalize your home loan and move forward with your closing date.
What is the next step after conditional approval? ›
Unconditional approval, also known as formal approval, is the step that comes after conditional approval. When you receive unconditional approval, it means the underwriter has verified your information, including the property's appraisal value, down payment, property title and other related documentation.
How long does underwriting take after all documents are submitted? ›
Underwriting can take as little as a few days or as long as a few weeks. It takes place after you have an accepted contract on a home, but before closing.
What does it mean when an underwriter is approved with conditions? ›
Conditionally approved means your mortgage application has gone through underwriting and the lender is expected to approve you for a home loan—as long as you meet certain conditions first. Conditional approval is not the same as a preapproval.
What is the final stage in the underwriting process? ›
The last stage of the underwriting process is the decision. Once your underwriter has thoroughly reviewed your application, they then decide on what category to put you in. Decisions range from, denied, suspended, approved with conditions, or approved.
How likely is it to get denied after conditional approval? ›
No, conditional approval doesn't guarantee you'll get the loan. It's still possible for your loan to fall through at this step in the process. However, it does mean that your loan will be approved as long as you meet the requirements set by your lender.
What is the final step of the mortgage approval process? ›
Close On Your New Home
The final step is to attend your closing day meeting and officially become a homeowner. At this closing meeting, you'll sign all necessary documents and ask any remaining questions regarding the sale or the property itself.
What is the final stage of a mortgage application? ›
Completion
Once you've accepted the mortgage offer from your lender, there are only 2 major steps left. Signing contracts and the transference of your deposit money. Your solicitor will contact you to arrange a date to sign contacts and confirm the transference of your deposit.
How do I know when underwriting is done? ›
Final Underwriting And Clear To Close: At Least 3 Days
At this point, you'll receive a Closing Disclosure. This document goes over the final details of your loan, including the loan amount, your interest rate, estimated monthly payment, closing costs and the total amount of cash you'll need to bring to closing.
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.
What is the longest underwriting can take? ›
Under normal circ*mstances, initial underwriting approval happens within 72 hours of submitting your full loan file. In extreme scenarios, this process could take as long as a month. However, it's unlikely to take so long unless you have an exceptionally complicated loan file.
What happens after approved with conditions? ›
After you receive conditional mortgage approval, your mortgage lender will require you to meet certain conditions before they will issue the final approval letter. When you've met all the conditions listed in your conditional approval letter, you'll receive the final approval letter.
How long after conditional approval is closing? ›
How long does it take to get final approval after conditional approval? The good news is that once your loan has been conditionally approved, you're basically in the home stretch. That being said, your lender will likely need another 1-2 weeks to finalize your home loan and move forward with your closing date.
What do underwriters look for in final approval? ›
In deciding whether to approve your mortgage, underwriters consider your credit history and score, your financial profile and a home appraisal. There are many steps involved in the underwriting process, which can take a few days or weeks to complete.
Why is final underwriting taking so long? ›
Underwriting delays can stem from issues like unexplained gaps in your employment history, unverifiable funds or a low home appraisal. To prevent these issues, be prepared with all necessary documents, respond quickly to lender inquiries and ensure your financial documents are comprehensive.
Does conditionally approved mean I got the loan? ›
What is conditional approval? Home loan pre-approval (or conditional approval) means that a lender has agreed, in principle, to lend you money towards the purchase of your home but hasn't proceeded to full or final approval.
