What Happens After Underwriting Approval in the Mortgage Process?

Getting approved for a mortgage loan is an exciting yet stressful process. When you finally get that underwriting approval, it feels like a huge weight has been lifted off your shoulders. But the process isn’t quite over yet – there are still a few important steps between underwriting approval and closing day

In this article, we’ll walk through everything you need to know about what happens after underwriting approval, and what to expect as you reach the final stages of the mortgage process.

Overview of the Mortgage Approval Process

First. let’s quickly recap the key steps in the mortgage approval process

• Application – You apply for a mortgage by submitting documents like pay stubs, tax returns, and bank statements to give the lender a complete picture of your finances.

• Processing – The lender reviews your application, verifies your employment and assets, orders an appraisal, and makes sure you meet eligibility requirements.

• Underwriting – An underwriter performs a detailed analysis of your finances and the property to evaluate your creditworthiness and the overall risk level of the loan.

• Conditional Approval – The underwriter may grant a “conditional approval” if they need a few more documents for full approval.

• Final Approval – Once you submit any additional documentation, the underwriter grants a “clear to close” for final approval.

Underwriting approval is a major milestone. But it doesn’t mean you can kick back and relax just yet. There are still a few final hurdles between underwriting and closing day.

What Happens After Underwriting Approval?

Final Verifications

After underwriting approval, the lender will conduct a few more final checks:

• Credit check – They’ll pull your credit again to make sure nothing major has changed.

• Income/employment verification – They may ask for a recent pay stub or call your employer to confirm you’re still employed.

• Appraisal – If it’s been awhile since the first appraisal, they may verify the home value is still accurate.

As long as everything checks out, you’ll get the green light to proceed.

Closing Disclosure Review

At least 3 business days before closing, you’ll receive a Closing Disclosure (CD) form. This outlines the final terms of your loan, including all costs and fees.

Carefully compare the CD to the Loan Estimate you received when you first applied. Key terms like your interest rate and lender fees should be the same on both documents. If not, contact your loan officer immediately to understand why.

Final Loan Documents

A few days before closing, you’ll receive a packet with all the final loan documents for your signature. Thoroughly review each document before signing. Your real estate agent and closing attorney can also help explain each form.

The Mortgage Closing

Closing day is finally here! To prepare:

• Review your CD so you understand all costs.

• Bring a cashier’s check, wired funds, or certified check for your down payment and closing costs.

• Set aside ample time – closings often take several hours.

At closing, you’ll sign the final paperwork and the home will officially be yours once the lender disburses the funds.

What Could Delay Closing After Underwriting Approval?

While you’re nearing the finish line after underwriting approval, there are some things that could still derail the process:

• Credit changes – If new accounts or inquiries show up on your credit report, it could impact your loan eligibility.

• Income loss – Losing your job or having a significant income reduction could make the lender reconsider.

• Taking on new debt – Financing a car or racking up credit card balances can alter your debt-to-income ratio.

• Appraisal issues – If the appraisal comes in way under the purchase price, it could delay or even cancel the loan.

• Title problems – Issues with who rightfully owns the property could hold up closing.

The best way to avoid issues is to keep your loan officer looped in on any changes to your situation, no matter how minor they may seem. Also, stick to routine spending and avoid major purchases or changes to your finances.

Wet vs Dry Closings

An important question to ask your loan officer – does your lender perform “wet” or “dry” closings? This refers to when the loan funds get disbursed.

In a wet closing, the lender provides the funding at closing. This is also called “table funding.”

In a dry closing, the lender disburses funds a few days after closing. The sellers will want assurance they’ll get paid promptly, so it’s best to understand how your lender handles this ahead of time.

Final Loan Funding and Delivery of Deed

The very last step is for the lender to transfer funds to the seller and officially fund your loan. Once funded, the property deed will be delivered to you!

This typically happens within 1-2 days of closing, but timings vary by lender. Ask your loan officer for specifics on their typical funding turnaround times.

And just like that, the keys are yours! While the mortgage process has many tedious steps, keeping your loan officer updated and staying organized will help everything go smoothly even after underwriting approval. Before you know it, you’ll be moving into your brand new home!