Loan approval means the house is mine. Or does it?
Actually, loan approval is the first step after loan application on your way to obtaining the three magic words “clear to close”. There are still actions that must be taken before the house is truly yours.
Once you have received loan approval from your lender’s underwriting department there will be what are referred to as conditions or stips (stipulations). Meaning that the lender will give you the mortgage subject to things like:
- Updated financials (as if the other 437 documents you sent were not good enough!)
- Homeowners insurance
- Flood insurance (if applicable)
- Estoppel letter (this applies to properties located within an association)
- Explanation letters regarding deposits or withdrawals from bank accounts, late payments, credit inquiries
- Copy of earnest money deposit
The above are examples of items that the underwriter could request in addition to many other things. Until an underwriter reviews your particular credit report and financial information it can be challenging to anticipate any conditions.
Working with a great loan officer can reduce the need for last minute requests relating to conditions. A loan officer that knows their underwriting guidelines well and anticipates what the underwriter is looking for saves time and stress.
Now that you have satisfied your loan conditions, your file will be submitted back to the underwriter for clear to close. This generally takes 24-48 hours (towards the end of the month it can take a little longer). As long as everything is as the underwriter requested a clear to close will be issued.
What happens next? The underwriter will release the file to the closing department. The closing department will draft all of the closing documents (including the mortgage) and send the package to the title company. Once the title company receives the package they will begin working on the closing statement; this is where any funds needed for closing will be calculated. Now that the closing statement has been drafted it will be sent back to the lender for approval.
Your lender approved closing statement will be sent to the real estate professionals involved in the transaction to ensure that things are included and calculated per the contract (taxes, any seller paid closing costs etc). Your agent will go over the closing statement with you to answer any questions you may have.
Now comes the fun part! Closing day and time is scheduled. You show up with your identification and any funds needed (some title companies will require a wire transfer). After signing what seems like 300 pages the closing agent will send over some documents to the lender to receive the funding number. The funding number releases all the mortgage money for disbursement.
Disbursement = keys. The house is FINALLY YOURS!!
Have questions about how to make your own happy dance happen? We would love to hear from you!
© Danielle Sharp | Sharp Homes Realty | email@example.com | Loan Approval Means The House Is Mine