The mortgage approval process is lengthy. Submitting all of the documents required to the loan officer is just one part of the loan approval process. If the loan officer says your application is “good to go,” they are most likely referring to the fact that you are able to submit complete documents. Technically, you’ve only hurdled the initial stage of loan approval.
The next stage involves loan processing and underwriting. The loan processor needs to ascertain all the information you have submitted to see if everything is accurate. He will not only review your credit report but check it against what you have declared in your application form. He will also call up your employer to see if you are really working there. They’ll also get documents from the IRS and compare it with what you have submitted to them as well. In addition to reviewing the veracity of the documents you have submitted, the loan processor will also check that your downpayment actually came from money you have honestly saved through the years and is not borrowed.
If the loan processor finds any discrepancy in your application, your mortgage could be denied at this stage. If there are details that are not clear during this review, the lender may get back to you and ask to provide additional documents to clarify matters and give more support to your application.
Once your application passes the loan processor’s check, it will then go to the underwriter who will make the final decision to grant you the loan or not. Basically, the underwriter will do the final review to make certain that your application is in consonance with the guidelines followed by government agencies like Fannie Mae, Freddie Mac and others that buy mortgage loans. It is also the underwriter’s job to see to it that the lender will not suffer if it grants you the mortgage.
Typically, you’ll have no issues with the underwriter if everything in your application is as you say it is and the property you plan to purchase has no title problems and its appraisal value is not lower than your purchase price. Even at this point, you could still be asked to provide additional documentation if certain details in your application don’t check out.
It is only when you have successfully passed loan processing and underwriting will you be able to say that your mortgage is approved. You will receive certain documents from the lender regarding your mortgage approval. These include a commitment letter which will provide details about your mortgage, such as the amount of the loan, interest and the monthly mortgage payment. You must sign and give back the commitment letter to the lender within a specific time period, usually five to ten days. You will also receive disclosures and the HUD-1 Settlement Statement which will give you details about your loan closing, including the fees you will need to pay for and the schedule of the closing of the loan.