The Underwriter issues the Clear To Close (CTC) once all the conditions meet the guidelines.
The underwriter helps a mortgage lender decide whether to approve your loan and works with you to make sure you've submitted all your paperwork. Ultimately, the underwriter will help ensure you don't close on a mortgage you can't afford. If you don't qualify, the mortgage underwriter can deny the loan.
"Clear to Close" means the Underwriter has signed-off on all documents and issued a final approval. You qualify for a mortgage and your mortgage team is moving forward with your home loan. Your lender will send you a clear to close letter and a copy of the Closing Disclosure (CD) at this stage of the process.
Once you've submitted your application, a loan processor will gather and organize the necessary documents for the underwriter. A mortgage underwriter is the person that approves or denies your loan application.
How long does the underwriting process typically take? Underwriting can take a few days to a few weeks before you'll be cleared to close.
The Underwriter issues the Clear To Close (CTC) once all the conditions meet the guidelines. The Closing Department then sends the title company the “loan instructions” so they can prepare the final Closing Disclosure (CD). The final Closing Disclosure (CD) will provide the exact amount of money due at closing.
Clear to close only means that the underwriter has cleared your mortgage application to move forward with signing the documents to close, but it is not final approval. There are a few more steps and actions to take before final approval, like an appraisal and inspection.
For this reason, the interaction between a loan officer and an underwriter is limited to a simple transfer of the borrower's facts and data. A loan officer may not attempt to influence the underwriter. Loan officers and underwriters are both crucial roles in the home buying process.
How many days before closing do you get mortgage approval? 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.
Your lender will need to verify your financial situation and identity before they issue the final approval. This means you'll have to provide documents such as pay stubs, bank statements, tax returns, W-2s, and ID cards.
Can a mortgage be denied after the closing disclosure is issued? Yes. Many lenders use third-party “loan audit” companies to validate your income, debt and assets again before you sign closing papers. If they discover major changes to your credit, income or cash to close, your loan could be denied.
You've submitted your loan application, been through conditional approval and now you've reached final approval! At this step of your loan, you've met the requirements and conditions to close on your mortgage.
Underwriting decision
Once the underwriter is satisfied with your application, the appraisal and title search, your loan will be deemed clear to close and can move forward with closing on the property.
Your loan officer will submit all your conditions back to the underwriter, who should then issue a “clear to close,” which means you're ready to sign loan documents. This last verification is your final approval.
However, even though prospective homebuyers get pre-approved for a mortgage before shopping for homes, there's no 100% guarantee they'll successfully get financing. Mortgages can get denied and real estate deals can fall apart — even after the buyer is pre-approved.
There are many reasons why an underwriter may deny your mortgage loan, such as a low income, an unsatisfactory credit history or a recent change in employment. If an underwriter denies your mortgage loan, try going to a smaller lender or addressing the issues that caused the denial in the first place.
Change in Lender or Loan Requirements
You may end up pre-approved for a mortgage but then denied because of circumstances beyond your control. Requirements for mortgage loans can change, and lenders may adjust their underwriting guidelines.
The final stage, and the one everyone looks forward to, is closing. At closing, all documents are explained to each party and the paperwork is signed. The interest rate, payment amounts and closing costs are also confirmed and funds are then transferred to complete the closing process.
After final approval, the lender sanctions the loan amount and transfers it to their bank account. Once you receive the loan amount, you are liable to repay the loan in full, including interest. The loan cycle ends after repayment of the loan amount in pre-decided tenure.
You may be wondering how often underwriters denies loans? According to the mortgage data firm HSH.com, about 8% of mortgage applications are denied, though denial rates vary by location and loan type. For example, FHA loans have different requirements that may make getting the loan easier than other loan types.
How Long Does It Take To Close After You've Been Cleared? Most buyers won't have to wait very long to meet at the closing table once they're clear to close. With that in mind, you should expect at least a 3-day buffer between the time you receive your Closing Disclosure and the day you close.
Signing your closing documents is the final step. Take time to review them carefully. Once you sign, you're responsible for the mortgage loan.
When you lock your interest rate, you're protected from rate increases due to market conditions. If rates go down prior to your loan closing and you want to take advantage of a lower rate, you may be able to pay a fee and relock at the lower interest rate. This is called "repricing" your loan.