Loan funding: The “final” final approval This means the lender has reviewed your signed documents, re-pulled your credit, and made sure nothing changed since the underwriter's last review of your loan file. When the loan funds, you can get the keys and enjoy your new home.
At this step of your loan, you've met the requirements and conditions to close on your mortgage. Underwriting has fully inspected your documents and verified that you meet the requirements of the loan type and mortgage amount you've requested.
"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.
Credit is pulled at least once at the beginning of the approval process, and then again just prior to closing. Sometimes it's pulled in the middle if necessary, so it's important that you be conscious of your credit and the things that may impact your scores and approvability throughout the entire process.
You will then be sent an approval letter for your loan. The average time for formal approval takes about four to six weeks from submitting the application to your lender, to reaching settlement on the property.
Federal law requires a three-day minimum between loan approval and closing on your new mortgage. You could be conditionally approved for one to two weeks before closing. Can you close on a house in two weeks? If you're a cash buyer, you could close on a house within a few days.
Recently, we have become aware that lenders are undertaking repeat employment checks on borrowers prior to advancing the funds for a property settlement. These status checks are now being carried out up to the date of settlement.
Loan funding: The “final” final approval
This means the lender has reviewed your signed documents, re-pulled your credit, and made sure nothing changed since the underwriter's last review of your loan file.
Alternatively, the lender may send your application back through underwriting for a second review. It's important for buyers to be aware that most lenders run a final credit check before closing, so the home-buying window is a time to prudently mind your credit.
Once your loan is approved, you will get a commitment letter from the lender. This document outlines the loan terms and your mortgage agreement. Your monthly costs and the annual percentage rate on your loan will be available for review. Any conditions that must be met before closing will also be documented.
The Bottom Line
Most people will go through these six steps: pre-approval, house shopping, mortgage application, loan processing, underwriting, and closing. The process can be long and stressful, but make sure you don't rush it.
Typically, once you've accepted a mortgage offer, you can move onto the next stage: exchanging contracts. This is one of the last steps before setting a completion date and, in a matter of weeks, receiving the keys to your new home!
Conditional approval is a higher level of approval than prequalification, but not as high as final or verified approval. At that point, you are ready to buy your new home. When you receive conditional approval, you are usually given some conditions you must meet before you can get final approval.
An underwriter is a person working for a lender who makes the final decision on whether a loan will be approved. There are four possible final loan application outcomes: conditional approval (this is the most common )
Home loan pre-approval (or conditional approval) means that a lender has agreed, in principle, to lend you money towards the purchase of your home but hasn't proceeded to full or final approval.
Some mortgage lenders may perform a final credit check between the exchange of contracts and your completion date. If your circumstances drastically change you are expected to inform your mortgage lender about it, and this may also prompt them to carry out some last-minute checks.
Some mortgage lenders like to double-check applications before they're willing to make a final, binding offer. This is to make sure that your circumstances are unchanged since the agreement in principle stage, and ensure nothing important was missed earlier on.
Can a lender withdraw your mortgage offer on completion day? Again, yes they can, but it's even rarer for this to happen than an offer being withdrawn after exchanging contracts.
In order to close on your house, you need to finalize your loan. And that means moving from conditional approval to unconditional/full approval. To get there, you need to meet all of the conditions the lender has laid out. In many cases, that means providing them with more information.
What is Credit Approval? Borrowers must complete a process called credit approval in order to qualify for a loan. Through this process, a lender assesses the ability and willingness of a borrower to fully repay (interest and principal) a loan on time.
Final credit to your Account is based on the total sum of the cash and items actually received by the Bank.
Yes, a loan can be denied after approval, but it rarely happens.
The unconditional, formal approval is usually valid for a fixed timeframe. This varies from lender to lender. However, it usually lasts about 3-6 months from the approval date. If you do not settle within this period, your lender may decline your home loan application, and you will need to reapply for finance.
Lenders can change their lending criteria at their discretion. This means that if a lender tightens their lending conditions after you were granted pre-approval and you no longer meet them, they could reject your application.