Once you have decided to buy a home, you choose a mortgage lender and get an approval. In the beginning of the process, you will provide several documents to your loan officer from paystubs to tax returns. Once everything has been through the process, the file goes to underwriting for your final approval!
The underwriter will go through your entire file and make sure that you qualify for the program and meet all the guidelines. Hopefully your loan officer will have done a good job with the loan file so that there isn't a lot needed from underwiting. However, even on the "perfect" files, underwriters will still find something they want clarification on. It may be something small, like an explanation or it may be more difficult. Once the underwriter finishes the file, they will give the processor/loan officer an approval with conditions. If you are really lucky, your loan may be clear to close - however, that doesn't happen very often!
Some tips to make it a little smoother are:
- Save everything!!! Do not pack financial documents (tax returns, bank statements, etc). Do not shred any of those documents.
- Be prepared to document any large deposits. A large deposit may be $200 or it may be $1000. It will depend on your income and your banking history. Keep copies of any checks you get.
- Provide all pages of any document. If your bank statement says 5 pages but the last page is advertising or something that doesn't seem necessary, don't throw it away! The underwriter wants to see all 5 pages.
- Don't move money around. If you typically transfer between accounts, this is not a good time for that. Underwriters will have to document the transfers and it makes the file a little more difficult to underwrite.
- Don't apply for new credit. Any inquiry has to be explained and if there is new debt, you will have to document the new credit and your file will have to be underwritten again.
- If your loan officer or the processor asks for any documentation, please provide it as soon as possible.
Your loan officer will go through your file and "pre-underwrite" it. The processor also goes through your file, but the underwriter has the final authority on the file! Be prepared to need a few more items when the underwriter finishes with your file! Once the underwriter has the final conditions, they will issue a final approval with a clear to close! That's what you are waiting for!!