ADM All Dominion Mortgage Blog

The Mortgage Approval Process

Many times after we meet with the loan officer we really do not understand the mortgage process. The loan officer does not fully explain things and we have in our own mind what is supposed to happen and when it should happen. Unfortunately this is a recipe for frustration. Rarely do things go the way we expect them, even if they go the way they are designed to, that may not be our expectation. If the loan officer sets the expectation and fully explains the mortgage approval process up front then we all will be happier. The process will change slightly from lender to lender and program to program, so as I lay out the general mortgage approval process. Be sure to confirm this with your loan officer.

Loan Officer

Pre-Qualification: This preliminary step happens when the loan officer talks to the client, gets their income and asset information, takes an application and pulls the credit report. Since the pre-qualification is nothing more than the loan officer expressing whether or not they think you will qualify the amount of verification they varies. This is only a loan officer opinion. This is not a mortgage approval.

Pre-Approval: The pre approval is more than the loan officer opinion. Generally the loan officer will take a complete application and submit it to an automated underwriting system for an automated mortgage approval. The credit is pulled but their is no verification or validation. Many times this pre approval is misinterpreted as an approval. Either at pre qualification or pre approval a complete and formal application is submitted. The loan officer collects the documentation they believe is necessary to process the loan then submits it to processing and underwriting for complete mortgage approval.

Processing and Underwriting

The loan processor takes control of the credit application now. They will verify and validate the informtion on the application. They will order the appraisal, title commitment, verification of employment, verification of deposits, and confirm all information on the application. Once the processor has verified the necessary information and the documentation they have ordered has returned she can submit it to underwriting for mortgage approval. Once the underwriter reviews the file most often the underwriter has questions and the file goes back to the processor to clear conditions. If the processor needs to contact the customer to clear those conditions they will. Sometimes we feel that we provided the information and it seems that the same things are asked for over and over again. That happens when the information does not properly answer the question or is incomplete. It is necessary that complete and most recent information is submitted initially to make the mortgage approval process as smooth as possible. It is the loan officers responsibility to know the general items needed and what is complete. On occasion we have unique circumstances or information comes up during  validation and verification that requires further information. By us working with the loan officer and processors we help make the process go quicker and easier. Only the underwriter approves or denies a loan. It is our job to present the loan in its best possible light with complete documentation to enhance the possibility of a quick clean mortgage approval.

Closing

Once the underwriter approves the loan ther may be conditions that the processor works to clear. When those conditions are cleared the file often goes back to the underwriter to issue a clear to close commitment. Sometimes the conditions are within the processors authority to clear the final conditions. Once a Clear to Close approval is issued the file goes to the closing department and a closing is scheduled. Generally, the attorneys schedule the closing. There are always conditions that must be cleared at the closing. Most often they only closing conditions that the escrow closer can clear. Sometimes there may be conditions that require the processor or underwriter to review before the funds are dispursed. This depends on the state the property is in and the lender, whether they will allow in underwriter to clear conditions to go to closing. Sometimes it is necessary.

Escrow Company

The final piece of the mortgage puzzle is the escrow company. They are a third party company, ussualy chosen by the seller for a purchase or the lender for a refinance. They represent the lender, title company, buyer, and seller ensuring that all interest are covered before they release the lenders funds. Of course the lender is the key because they issue the money, but if there is not agreement with other parties then there is no deal and the escrow company makes sure all parties complete the necessary lender, governmental and buyer seller aggrement forms.

This is the general flow of the mortgage process from pre application to funding. The time it takes to move from one stage to the next varies by program, borrower circumstances, and lender capacity. Communication is important. You should always ask your loan officer to give you a reasonable expectation of what time frame of every step as well as the process in total. If there are hurdles or snags along the way it is your loan officer who is responsible to keep you informed.

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