Today we’ll be looking at the first four major milestones in the mortgage process and discuss what they mean for your client. I hope that you find this video helpful, and encourage you to share this content with your clients!
1. Loan processing. This is the first of the four major milestones. Your loan will be pre-underwritten by our processors to ensure that we have everything we need. They’ll confirm that we have all of your W-2s, tax returns, bank statements and verifications of employment, compile them into a neat file, then submit them to underwriting. We strive to have the loan processors hold the file for no longer than 72 hours before they push it through to the next step of the process.
2. Underwriting. Underwriting is, in my opinion, one of the most stressful times of the mortgage process. The file is randomly assigned to an underwriter who double-checks the work that the loan originator and the processor did during the pre-approval process in putting the file together. They’ll go through the file with a fine-tooth comb, recalculating income and inspecting the appraisal as well as the paycheck stubs. Underwriters are in place to protect you by making sure that you are not getting in over your head by buying a property you can’t afford.
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Underwriters are in place to protect you.
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3. What happens when my loan is approved with conditions? As far as where you can be at this point in the process, being approved with conditions is exactly what we want to see. What this means is that the underwriter is going to offer you a conditional commitment to lend, as long as you provide what they’re asking for.
If this is a purchase, one of the most common conditions is verification of your earnest money deposit. We have to see the resulting balance of your bank account once that money comes out. Often, if the deposit isn’t verified correctly, the buyer may be short on funds to close.
Other possible conditions could be very minor, like needing an updated paystub and bank statement, or simply a letter of explanation.
4. What does it mean when my loan is clear to close? This is the best milestone in the process: the happy dance milestone. It means that all of the conditions have been met, and there is nothing keeping you from getting into your home.
