What occurs after underwriting? Mortgage approval and completion

What happens after underwriting?

Getting final mortgage insurer approval is a big deal – but it's not the time to celebrate just yet.

You are going to go through a few more steps before receiving the keys to your new location.

The lender needs to verify your income and employment. And you still have to sign graduation documents and pay graduation costs.

Learn exactly what needs to happen after final approval to get your home sale over the finish line.

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Final steps in the mortgage process

Once your mortgage lender approves the loan, there are only a few hurdles to overcome:

Your lender will do a final check and verify that your documents are correct. The lender will likely do a quality check, run your credit report, and review your employment one last time. Close for review before signing You bring your cash to close and sign your final documents

Some lenders will fund your home loan almost instantly (table finance), while others will take a day or two to review the signed package first.

Find out in advance what your lender will do to avoid any unpleasant surprises.

Final approval vs. conditional approval

Most borrowers receive a “conditional approval” prior to “final approval”. So don't be surprised if your mortgage insurer has questions about your financial situation.

Mortgage lenders are employees of the lender to review and analyze your ability to repay the loan.

The underwriting process will review your bank statements, credit history, and pay slips to verify employment. Self-employed borrowers may be required to file transcripts of their tax returns.

If something is wrong in these documents or raises questions for the lender, you may get conditional approval with a few extra steps before closing.

As part of your conditional approval, the underwriter will issue a list of requirements. These requirements are referred to as “terms” or “pre-document terms”.

From "Conditional Approval" to "Clear to Close"

To meet these conditions, you may need to submit additional documents such as:

Additional bank statements or pay slips – The lender may need this additional information to get a more complete picture of your financial situationGift letters – If a close friend or family member gave you cash for closing costs or your down payment, you need one Donor's letter confirm the giftProof of insurance – If you are using a traditional loan with less than 20% off, your lender will need personal mortgage insurance. (USDA and FHA loans come with built-in mortgage insurance; VA loans do not require them) Explanations – Your lender may want you to explain late payments or large transactions that appear on your bank statements. If they are abnormal, they shouldn't affect your eligibility

You don't need to take these requests for additional information personally. Conditional approvals are a common part of the mortgage process.

Your loan officer will send all of your terms back to the underwriter, who should then issue a "Clear to Close" which means that you are ready to sign loan documents. This final review is your final approval.

How long does it take to get final approval?

It can take about two weeks for your loan to go from conditional approval to final approval, but there is no guarantee of that time frame.

You can speed up the process by instantly responding to your underwriter's questions. If possible, submit the additional documents on the same day as the request.

By providing documents and answering questions, you are doing your part to keep your loan on track.

However, final approval is not the end of the mortgage process. You still need to sign documents and go through a mortgage approval process after signing. Continue reading.

What happens after the final approval?

After getting the final mortgage approval, you will take part in the loan closing (signing). You must bring a cashier's check, certified check for your till, or arrange for a bank transfer in advance.

As the closing date approaches, there is no need to make any changes to your mortgage application that could allow the lender to revoke your final approval.

For example, buying a car can put you over the debt-income ratio (DTI) line. Or opening a new credit card account or applying for a personal loan could affect your credit score.

Do not open credit accounts or fund large purchases before closing. This could affect your loan approval.

In this case, your home loan application can be rejected even after the documents have been signed.

This way, a definitive loan approval is not exactly definitive. It could still be revoked.

This really happens to homebuyers. So protect yourself. When applying for a mortgage, enter a “rest period”. Just buy the basics until your loan is "funded". Don't add anything to your balance or sign up for new accounts.

This is good advice whether you are a first-time buyer, a home owner refinancing, or an investor buying a rental property.

Document review: LE vs. CD

You may recall that when you applied for a mortgage, the lender provided a Loan Estimation Form (LE) that lists your mortgage terms and an estimate of your cost.

You will now receive a Closing Disclosure (CD) form at least three working days before your closing day.

What is the difference between these two documents?

Loan estimate form: This document provides an estimate of your loan terms and costs, which may vary based on your loan type, mortgage rate, and loan amountDisclosure Final Form: This document shows what you should actually pay, both on your graduation day and for your monthly payments

There shouldn't be much difference between your LE and CD, but it's up to you to compare the documents to be sure.

What happens after the closing disclosure?

Federal law requires that mortgage lenders provide a closing disclosure at least three business days prior to your closing date.

When you receive your CD form, you will need to compare it to the loan estimate you received when you submitted your mortgage application.

Some of the fees on your loan estimate, such as the loan origination fee and evaluation fee, should never change when you close your statement.

If these fees have changed, contact your loan officer and ask for a cost correction. Even a 0.25% increase in your lending fee can have a huge impact on the closing cost as this fee is based on your loan amount.

Costs that can change from LE to CD

The rental fee should not increase between your LE and your CD, but other costs listed on your CD may increase.

Some can go up as much as 10% while others can go up any amount.

Can be increased by up to 10%: This includes survey fees, title search fees, and pest control fees. Since these services are provided by third parties, the costs are not directly controlled by the lenderCan be increased by any amount: Some costs depend on the final details of your loan and therefore can increase significantly between your LE and CD. Your home insurance may, for example, require an advance payment. Or you have to pay the property tax in advance. Delays on your closing day can also add some costs

Be sure to ask your loan officer or graduation attorney about any cost increases that you see on your CD.

What about the interest rate?

The interest rate on your pre-approval or loan estimate should be similar to the interest rate on your final statement, especially if you set your interest rate at the beginning of the loan process.

In fact, according to the Consumer Financial Protection Bureau, it is illegal for lenders to underestimate the interest rates and fees on a loan estimate only to surprise you with higher costs when you close the deal.

Even so, your interest rate could go up if:

Your financial situation changes: A decline in creditworthiness or loss of income could cause the lender to raise your interest rate or void your claimYour tariff lock expires: Delays in signing up can mean you need to lock a new tariff, although this can often be prevented by tariff lock extensionsThey switch loan programs: For example, if you opt for a conventional loan instead of an FHA loan, you will likely see different interest ratesThe rating of the house was low: A low estimate will change your LTV, which can affect mortgage rates or eligibilityYour lender couldn't verify everything: If underwriters can't review your extra income or overtime, your debt-to-income ratio could go up. This could lead to an increase in your rateYou have changed the details of the loan: If you chose a 30 year term instead of a 15 year term – or if you chose to invest less money – your interest rate would go up

Before setting a mortgage rate, get a realistic estimate from your lender of how long it will take to complete the loan.

Choosing a sufficient fixed interest period is one of the best ways to protect yourself from unexpected interest rate hikes on your new loan.

Dry versus wet settlements

If everything has been checked when your financial statements are disclosed, you are ready for the closing day.

There is one final task that the entire home buying process has resulted in: the lender needs to fund the transaction by providing the money to pay for your new home.

You may have a "wet" settlement where the lender's money is paid out on completion. This is also known as "table financing".

Some lenders prefer a "dry" transaction; H. the money will be paid out a few days after graduation.

Ask the closing agent or your mortgage broker how the lender's funding is handled. Delay in payment can make sellers moody – if not worse.

As a buyer, you almost always need to close cash to cover your down payment and closing costs.

It's okay to use a cashier's check, certified check, or transfer the money. You cannot bring cash with you to most title offices.

Be sure to check with the closing agent when transferring money. Make sure the wiring instructions are correct, especially the recipient's account number.

Loan Financing: The “final” final approval

Your mortgage process is not fully complete until the lender finances the loan. This means that the lender has checked your signed documents, withdrawn your loan and made sure nothing has changed since the insurer last checked your credit file.

When the loan is used up, you can get the keys and enjoy your new home.

Confirm your new price (June 25, 2021)

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