There are several verification processes that take place after you are under contract and it is impossible in the beginning stages to know whether there are any issues which will delay closing.
On the average loan process,. there are 18 people and 65 process that are involved with getting the mortgage loan to the closing table. That is on just one loan. Your lender works on hundreds of loans every month. It is very important that you cooperate with your lender and get everything requested so you have the best chance possible to close on time.
Here are a few tips to help you along with the final mortgage process:
- There are 3(THREE) approvals on the loan – The first approval is credit approval. If you have been prequalified for a mortgage, then you are credit approved. This means the bank/mortgage company has looked at your credit and hopefully your income/assets and has a reasonable expectation your loan will be fully approved. The second approval is income and asset approval. An Underwriter will look to see that there is enough money to put down on the mortgage and that the assets meet the investor requirements.(The Underwriter works for the bank/mortgage company and is responsible to ensure the mortgage loan meets investor requirements.) In addition, the Underwriter will be paying very close attention to the paystubs, W2s and/or tax returns to make sure there is enough income to support the house payment and any additional debt in which you are responsible to pay. Last but not least is the property approval. The Underwriter will review the appraisal to make sure the home is acceptable collateral for the loan.
- There are two types of approval – There are conditional and final approvals. Theconditional approval is just how it sounds – conditional. This means your loan has been approved pending additional items needed. The additional items could change the outcome of the final approval so it is very important to turn around the requested items as soon as possible. Often times, the Underwriter will approve the loan and request additional items. This is TOTALLY normal and not cause for alarm but it is very important at this stage of the game to be completely cooperative. Sometimes the conditional approval does not require anything from you, but may require additional information from another party such as the seller, appraisal, real estate agent, etc. If this is the case, a representative from the bank/mortgage company will work with the proper party to ensure we have what is needed for final approval. Once the documentation from the conditional approval items are reviewed and cleared by the Underwriter, final loan approval will be issued. Final loan approval is the term we use to let you know all three approvals have been granted. Once the loan is final approved, the file goes to the closing table.The loan will not be sent to the closing attorney until final approval is issued…. (think of the popular saying, “It ain’t over ‘til the fat lady sings”) The process is not over until final approval is issued.
- Be prepared in the event of a delay – This tip is not to scare you but I cannot prepare you properly for this process without this disclaimer. It is vital that you have a plan B in place in the event your loan closing is delayed. I have been in the mortgage business for 21 years and as a result, I have seen a little of everything. On an “average” loan file, there are at least 21 parties involved in getting the loan to closing table. If the file has challenges such as an issue with the credit, income, asset or property, the number could be more than 21. If I were to sit down and make a list of ALL of the various things that can and sometimes do go wrong in the process, I would have a list of about 90 different issues. Now, here is the good news. Most of the mortgage loans close on time time but I HAVE seen a lot in my day. In my own personal experience, I have seldom had one that didn't make it to the closing table, but I have experienced quite a few delays. The closing date on the contract is a target date, it is not concrete. This is because it is impossible to know what may come up during the process at the initial acceptance of the contract. It is imperative that you have a plan B in place to execute. For example, if you have to give a notice to your landlord, then you need to know what the policy is if you miss the date. If you have movers lined up to move all of your furniture, then you need to know what the policy is in the event you have to change the date. If you have schedule a day off work, then you will need to know the policy if you need to take off another date. I promise you that it is not fun for anyone when the closing date is missed, and we all work very hard to prevent this, but it still happens and it will be a WHOLE LOT easier on you if you have a plan B and are prepared.
- Don’t stress out too soon: – This is easier said than done, but please do not let this process keep you up at night. Rest assured that you are not being treated differently than anyone else looking to finance a home. There is a process that has to happen and while it can be stressful, there are very few exceptions granted to the process. As long as your are working with a qualified professional who knows what he/she is doing, then you should be fine.
- Keep the lines of communication open – Don't keep secrets! If you are thinking of purchasing ANYTHING or even RENTING anything, then tell your loan officer. If you are switching jobs, then tell your loan officer. If you are having doubts, or are confused, or if you do not understand something, then tell your loan officer. If he/she does not hear from you, then the concerns cannot be adequately addressed. If the loan officer cannot get to you right away, then please leave a message, email or text. A qualified professional will not think you are bothering him/her and will get back to you in a timely manner. If a timely response is not provided, then you need to get your real estate agent involved to see what can be done about the lack of communication.