Conditions of a Mortgage

After you apply for a mortgage and your mortgage professional submits your application for approval, the underwriter may ask you to clear certain conditions before making a decision. To fulfill these conditions, you usually need to supply additional documents to clarify financial facts within a specified period of time.

Features

• An approved mortgage usually comes with a few conditions set by the underwriter. At this stage, the underwriter usually provides you with a checklist of borrower conditions that you need to satisfy before getting a full approval. These conditions often require you to provide additional documents containing explanation, correction and verifications. Satisfying these conditions may take time because you often need to obtain documents from third parties.

Examples

• If you don't have credit histories or scores, the underwriter may ask you for payment history of utilities, such as gas and electricity. If you have unconventional income sources, you may have to get an accountant to prepare a profit and loss statement. The underwriter may also ask you to explain or correct inconsistencies in credit reports, tax statements and pay stubs. Other possible conditions include verifications of employment and income, housing history and letters from donors who provide you with funds.

Timing

• Satisfying the mortgage conditions is the stage that delays the approval of most loans. Many times, this is because various third parties take longer than expected to produce the documents you need. For example, your place of work may be going through a busy period and take more than one week to provide a verification of employment. If you have bad debt, it also takes time for you to clear the collection account and obtain relevant documents.

Clear to Close

• Once you satisfy all the conditions, the lender issues a clear to close, which means the lender will soon be ready to provide the mortgage funds. It usually takes two to three days from a clear to close for the lender to process your funds. Aiming to get a clear to close at least one full week before closing provides you with enough time in case it takes longer for the lender to process your funds.