Get Final Approval and Prepare for Closing
An underwriter will do one final review to ensure your loan is financially sound. We may request additional information or documentation to clear any remaining conditions. Then, your loan will receive final approval and move to closing.
Clear to close means you've done everything the lender requires to obtain a mortgage and have been formally approved for financing. Until you've been cleared to close, a lender could still decide to deny your application for a mortgage, although the chances of that are exceptionally slim.
How long from clear to close is closing? Once your loan is approved and cleared to close, the mortgage team will have 3 days to finalize all of your closing documents so you're ready to complete the transaction.
Simply, if you're preapproved for a mortgage there is still a possibility you could be denied after. In fact, approximately 5,741 VA loans were preapproved but not accepted according to 2022 HMDA data. Let's explore more about what it means to be preapproved for a home loan and why you could be denied after.
Let's discuss what underwriters look for in the loan approval process. In considering your application, they look at a variety of factors, including your credit history, income and any outstanding debts. This important step in the process focuses on the three C's of underwriting — credit, capacity and collateral.
Once your loan is approved and your inspection, appraisal and title search are complete, your lender will set a closing date and let you know exactly how much money you'll need to bring to your closing. Close on your home.
What's Next in the Mortgage Process? Once the final underwriting approval is issued the file will be assigned to a Closer. The lender's Closer will work with the attorneys to prepare closing instruction and send docs to title.
Your lender is required to send you a Closing Disclosure that you must receive at least three business days before your closing. It's important that you carefully review the Closing Disclosure to make sure that the terms of your loan are what you are expecting.
Final steps in the mortgage process
Your lender will conduct a final review, double-checking to make sure your documents are correct. The lender will probably do a quality control check, pulling your credit report and verifying your employment one last time.
On closing day, the ownership of the property is transferred to you, the buyer. This day consists of transferring funds from escrow, providing mortgage and title fees, and updating the deed of the house to your name.
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.
While loans falling through after closing may not be the norm, it does happen. And unfortunately, some things will be out of your hands, like title issues. But there are many things in your control, such as not making big purchases or applying for new credit.
Once all the conditions have been met, your mortgage lender will issue you a final approval. This means that the loan has been approved and you can now close on the property.
When your lender informs you that your mortgage is “clear to close,” it means that all the prerequisites for your loan have been met, and the mortgage underwriter has given the final approval. This includes: Verification of your income and assets. A satisfactory home appraisal and inspection.
After considering all these factors, the underwriter makes a final decision. The underwriter could approve, deny or suspend your application based on their assessment of your creditworthiness. This process is essential for lenders.
Some buyers may be able to negotiate an immediate possession date. This means as soon as the transaction is closed and the deed is recorded, the buyer can move in. A few other common buyer possession dates may be 15 days, 30 days, 60 days, or even 90 days after closing, depending on how much time the seller needs.
It is possible for your lender to find a last-minute red flag and back out of the contract. In other words, getting denied after the Closing Disclosure is issued is possible. This is why it is important to make sure there are no major changes to your credit or income during this period.
It is technically possible to close on a home in 30 days, or even less, particularly if you are paying all-cash rather than getting a mortgage or dealing with a homebuying company or iBuyer. But in general, according to data from ICE Mortgage Technology it takes about 44 days to close on a home.
Mortgages can get denied and real estate deals can fall apart — even after the buyer is pre-approved. If you're aware of the pitfalls, you'll reduce the chance it can happen to you! Keep reading to learn the most common reasons mortgages get denied after pre-approval.
Step 4: Final Approval
This means that the lender is ready to close the loan and fund the purchase of your new home. Final approval typically takes one to two weeks, depending on the complexity of the conditions that needed to be met and how quickly you were able to satisfy them.
On average, closing on a house in California can take anywhere from 30 to 45 days, post-acceptance of an offer. This timeframe is fluid, influenced by the factors mentioned earlier. Each step, from financing approval to inspections, plays a crucial role in the overall timeline.
Last step: exchange contracts – and move in!
With an official mortgage offer in your pocket from your lender, it's time to exchange contracts. That's when your solicitor and the seller's solicitor agree that all the paperwork looks good, and tell the lender to go ahead and send the mortgage money to the seller.
You've made it to the last step in the house closing process: signing the final paperwork. Closings usually take place at a title company with a closing agent and any co-borrower(s). There are also options now that allow you to do all of this online.
Once the mortgage underwriter is satisfied with your application, the appraisal and title search, your loan will be deemed clear to close. At that point, you can move forward with closing on the property.