The underwriter will ensure your financial profile matches your lender's qualification guidelines and loan criteria. Then, the underwriter will make the final decision to approve or deny your loan application.
Loan is clear to close
The term “clear to close” means the Underwriter has signed-off on all documents and issued a final approval.
Final Loan Approval
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.
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.
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.
Underwriters are the decision makers because they look at your application and will determine whether you receive approval. They usually have the final say as to whether you'll receive a loan or insurance policy.
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.
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.
Final loan approval means that your credit history, bank accounts, and income have all been thoroughly checked and you can move forward with your home purchase. It's the moment when you can breathe a sigh of relief, knowing that the finish line is right in front of you.
Decision
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.
The mortgage underwriting process can take up to 60 days. The standard turnaround time to take a mortgage purchase loan from contract to funding usually takes 30 to 45 days, but most lenders will work to have the mortgage underwritten within 30 days to meet the agreed upon closing date set in the purchase contract.
The Meaning of “Clear to Close”
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.
How Long Does Underwriting Take, On Average? Underwriting typically takes 30 – 45 days, but every home buyer's situation is different. In some cases, the process may only take a few days.
Lenders run your credit just before your house closes to ensure your financial situation hasn't changed and you still meet the eligibility requirements for the loan. If your credit score decreases before closing, you can risk mortgage approval.
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.
Jumbo loans: 17.8% denial rate. Conventional conforming loans: 7.6% denial rate. Refinance loans: 24.7% denial rate.
The “closing” is the last step in buying and financing a home. The "closing,” also called “settlement,” is when you and all the other parties in a mortgage loan transaction sign the necessary documents. After signing these documents, you become responsible for the mortgage loan.
To begin with, yes. Many lenders hire external companies to double-check income, debts, and assets before signing closing documents. If you have significant changes in your credit, income, or funds needed for closing, you may be denied the loan.
And of course, they will require a credit check. I am often asked if we pull credit more than once. The answer is yes. Keep in mind that within a 45-day window, multiple credit checks from mortgage lenders only affects your credit rating as if it were a single pull.
If your financial situation changes suddenly, for example, a significant loss of income or a large amount of new debt, then your loan could be denied. Issues related to the condition of the property can lead to a loan denial after 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.
Spending habits
And they will look to see if you are regularly spending less than you earn consistent with the savings you are claiming. No matter how frugal you might be most lenders have adopted a floor on the living expenses they will accept.
Though you can't usually speak directly to an underwriter, your loan officer should give you a clear reason for the denial. You'll have a short time to try to overturn the denial — it doesn't become official until the lender issues a denial letter.