The 6 major steps in mortgage loan processing

The mortgage loan process may seem far from simple. There’s a lot that happens between your initial consultation and your loan being funded. Here, we’ll walk you through it, step by step.

We’ll explain every major step of home loan processing. Of course, there are many factors in play here, so no one can guarantee that an applicant will be approved, or that a closing can or will occur within a specific timeframe. All dates and time periods we give here should be taken as estimates. Just bear that in mind as we go along.

That said, 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 you’ll reach during loan processing and what’s happening at each stage of the process: 

The Mortgage Consultant collects and verifies all documents necessary to prepare the loan file for underwriting. The documents provide us with everything that we need to know about you (the borrower), and the property you are financing.

The Underwriter begins the loan underwriting process, reviewing all documentation to determine whether you qualify for the mortgage. While the Loan Officer and Mortgage Consultant will do their best to submit a complete file during loan underwriting, an Underwriter may still have questions and/or require additional documentation to satisfy any conditions for a final approval.

What do underwriters do?
Mortgage Underwriters review financial statements, employment records, housing market reports, home appraisal reports, and other documents to check that you can both afford the home loan you’re applying for, as well as that the home you’re buying provides sufficient collateral for the mortgage.

How long does underwriting take?
Underwriters tend to be pretty thorough in their work, and they need ample time to conduct their reviews and assess the level of risk that each prospective borrower presents. As such, don’t be surprised if it takes several weeks to receive initial underwriting approval on your mortgage. Exact timelines will depend on the documentation you provide, the complexity of your financial circumstances and the underwriting team’s workload. The best thing you can do to help keep things moving along is to anticipate documentation needs and respond to requests as quickly as possible.

If your loan application presents an acceptable level of risk for the underwriting team, then they will grant you conditional loan approval. But you’re not in the clear just yet.

What does conditionally approved mean?
A conditional loan approval means that the underwriter has signed off on the parameters of the loan and most of the documentation, but still needs a few more items before fully approving the borrower for the loan. At this stage in the mortgage process, your loan status is contingent on meeting those final conditions.

What conditions do you need to meet?
In most cases, mortgage teams want to see additional documentation to verify your finances and get a more complete picture of your financial behavior. These documents often overlap with the materials requested leading up to initial underwriting approval.

Your best bet to get ahead of any loan application problems is to avoid extra debt (like a new car loan), maintain steady employment, and keep a close eye on your streams of income.

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 does “clear to close” mean?
The term “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 almost there, 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.

How long does clear to close take?
Waiting on clear to close can be agonizing for a homebuyer, which is why we speed up this process as much as possible to get you to the closing table without delay. Our goal is to have you clear to close in as little as 10 days — and the clock starts running as soon as we receive your loan application.

How long from clear to close is closing?
Once your loan is approved and cleared to close, the mortgage team will have 3 days to finalize all of your closing documents so you’re ready to complete the transaction. So, barring any unforeseen complications, you’ll be sitting at the closing table and signing the property deed on your new home about 72 hours from the time you receive your CD.

Closing processes vary slightly depending on the type of transaction, as well as local, state, and municipal laws. The type of transaction — purchase or refinance — determines who can provide you with accurate final numbers. If your closing date falls on a work day, we recommend taking the entire day off from work to make sure you can fully understand and authorize all the paperwork without being in a rush.

Also, be sure to check with the Mortgage Professional for a list of what you will need to bring to the closing table, such as your photo ID, payment for closing costs, etc.

The final step on the loan process is now complete: Your loan has been funded! At this time, all documentation is complete and the funds for the loan have been disbursed to the seller (for purchase) or to the payoff of the prior loan (for refinance).

You should receive your first payment statement at the closing. This should be used to make the first and possibly second loan payment. If you did not receive the statement or cannot find it, you can reach out to your Mortgage Professional for a copy.

Hopefully, this breakdown helps you understand the inner workings of the mortgage process. Don’t hesitate to contact us with your specific questions along the way. We’re here to simplify a complex process and to provide the kind of personal service and advice you deserve.

In short, we’re here to get you home.

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