Step 3 – Underwriting and Clearing Conditions

Underwriting

This part of the process can take from 1 to 3 business days. Underwriting is the process by which the underwriter looks at the aplication and decides whether the loan makes sense or not. If it makes sense, they decide whether to approve the mortgage.

Automated underwriting now can take care of most, if not all, of the tasks that used to be done by hand. A process that used to take 2 weeks now is done instantly.

Clearing Conditions can take up to 1 month

Sometimes the automated underwriting process, or the underwriter feels it is necessary to get additional information to make a decision on the loan.
In this case, as soon as your mortgage banker lets you know that there are conditions to clear, get the information or take care of the tasks immediately. This is when most loans can be delayed because of the time it takes most companies to get the information to you.

Some examples of conditions can be:

  • Verification of Employment
  • Proof of where the funds in your bank account came from
  • Explanation of late payments
  • Explanations of gaps in employment
  • Past account collections

If you know about some of these things, and can bring letters, proof and other appropriate documents and information to the meeting with your mortgage banker, it can speed up the process considerably.

Issues with your title can be the most time consuming and can be resulting from misfiled paperwork to tax liens that need to be cleared up.

As conditions that involve a third party to clear them up can take considerable time, please be patient with your mortgage representative and please do what you can to help them to clear things up.

When all of the conditions are cleared, a "clear to close" is issued by the lender and the closing may be scheduled a few days later. Closing cannot be scheduled until all of the conditions are cleared. Please keep this in mind when you are wondering when the closing will be.

Many mortgage bankers try to push the closing date up, the clear to close should really be done a week before closing. There can be no closing until getting one. Having to move the closing date can lead to disappointment and bad feelings, being realistic can save everyone time and sanity.

Click here for information about closing.