Actually, we have already found a house and made an offer to buy it.
However, let me address some reasons why a preliminary approval does not mean that the entire loan is approved. Having read some borrower concerns about having an approval and then all of a sudden; the loan is delayed, or declined. It is never good news to have a preliminary approval and then hear that the loan cannot close.
However, when and if you only have a credit approval, it does not necessarily mean that everything else about the loan has been approved. The property is the collateral for the loan is not considered in the preliminary approval process.
Other times they may input the information you have given them, and run the credit approval. This approval means that if everything else about the file is approved your credit is okay to go forward. There are things that can pop up that can change the game plan.
When the lender delivers the preliminary approval to you, they may also request some additional documentation to clear up something they have observed from the file. Many times the only approval you have at this time is the credit, nothing more, to say this again clearly. This means that you may still need your: This verification will include bank statements, investments, K statements, gift documentation, or whatever source s you are using for down payment and closing cost.
If you have a gift for fund to close, you will need a gift letter from an approved source, evidence of the funds available for the donor, and evidence of receipt. Any source of funds used for closing must be fully verifiable from an acceptable source, which meets the investor guidelines, and per the automated underwriting system.
If your employment has not been fully verified, there may be a need for more answers as well. If you submit your pay stubs and there are additional deductions, they will need to be explained also. If you are using overtime, commission, tip or bonus income, the history of receipt for this must be verified.
Most sources of income require two-year evidence of receipt. If you have only been on the job for one year, you will need to follow-up with documentation to meet the two-year guideline. Rental or prior mortgage history verified with no late payments within the past 12 months.
The sales contract and property appraisal must meet investor guidelines and be suitable for security for the loan. There are certain contingencies that cannot affect the contract. The sale contract must disclose all the normal items that will remain with the property, and cannot represent any inducements to the purchase.
Inducements to the contract include, but are not limited to: Any payment made by the seller, which are above the allowable Seller Contributions, which exceeds 6 percent of the purchase price FHA.Feb 01, · During the mortgage underwriting stage, your application moves from the desk of the loan processor to the mortgage underwriter.
The mortgage underwriter will ensure your financial profile matches your lender’s guidelines and loan criteria and he or she will ultimately make the final decision: to approve or deny your loan request.
Underwriter approval shows that you have a lender's approval to close, but it may include some lingering conditions. Closing on a mortgage entails signing a stack of official documents and preparing the transfer of money and title.
Getting fully underwritten pre-approval before finding a property. in contract, approved by the underwriter, and purchased within 30 days of your approval, you have to go back through the entire underwriting process. especially if there's a glitch near closing because the underwriter is a few desks away and has a more personal stake in.
During the weekend of Dec. 8, we will implement Desktop Underwriter (DU) Version , including adjustments to the DU credit risk assessment, appraisal waiver . How Does Underwriting Work? When the time comes for your business to apply for a loan, you’ll want to read our guide to the application process so you can be prepared and give yourself the best chance for approval.
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