Basic Overview of the Financing Process
Please note that while the outline below properly illustrates the different stages of the financing process, every lender has different requirements and every borrower has a different financial background. This is intended to be a general guide, and not all the information listed will apply to everyone.
There are four stages in the mortgage process. Each stage can take anywhere from one to two weeks depending on the type of property, borrower financial profile, and title/closing office.
Stage 1: Initial Review
Once under contract the lender requests a list of documents from the borrowers. (If not already pre-approved, the list may be longer—see list on Typical items requested by lenders.)
An appraisal is ordered and reviewed.
The file will go to the underwriter for an initial review.
Underwriter may request certain “conditions” to clarify information received.
Stage 2: Conditional Approval
The lender provides a loan commitment with a list of conditions that needs to be submitted before the final approval. The processor cannot resubmit conditions to the underwriter until all requested items are received.
Every new submission may take forty-eight to seventy-two hours to receive a response.
Stage 3: Final Approval
Final documents from the transaction are submitted to the underwriters for final approval.
Any missing, misplaced, erroneous, or outdated documents will be requested again. (Example: bank statements—these pages are numbered, and they all must be submitted even if blank, employment verifications, etc.)
The lender may request multiple signed explanation letters from borrowers to clarify, or solidify, documentation.
Stage 4: Preparing for closing
The lender notifies the title/closing agency of a “clear to close” and prepares closing instructions. (This may take up to two days.)
The lender prepares closing disclosure, title reviews and adds information then send
back to lender for final approval. Due to recent changes in financing laws, lenders are
now required to provide borrowers with a closing disclosure and borrower must
acknowledge receipt a minimum of 3 days (not including federal holidays and Sundays)
The lender will supply the borrower with the final closing disclosure, then title will
schedule closing, supply instructions for final funds that must be wired and coordinate
the closing location.
NOTE: END-OF-MONTH CLOSINGS REQUIRE MORE TIME DUE TO INCREASED NUMBER OF CLOSINGS.
Until recently the typical processing time for a mortgage was 30-45 days. Now with the new laws average processing time is within 45-60 days. Some lenders are able to process sooner depending on how quickly borrowers return conditions and how quickly the title office can provide what is needed. Always contact your agent for guidance if additional information is needed.