Leading To a Clear-To-Close For a Mortgage
This guide covers the steps leading to a clear-to-close on a mortgage. The mortgage process starts with the borrower submitting a mortgage loan application and getting qualified by a loan officer. After reviewing the borrower’s credit report, credit scores, income, and documents and getting an approve/eligible per the automated underwriting system, the loan officer will issue a pre-approval.
Armed with a solid pre-approval letter, the homebuyer will shop for a home. Once the homebuyer finds a home they want to purchase and enter into a real estate home purchase contract.
The mortgage process starts once the buyer and seller have signed a real estate purchase contract. A mortgage processor will gather all the mortgage documents needed for the underwriter. The mortgage underwriter is the key person who decides whether or not the borrower gets approved for a mortgage. The mortgage underwriter is the person who issues the conditional loan approval. The underwriter clears conditions and issues the clear-to-close.
The Start of The Mortgage Process
The clear-to-close is the ultimate step of the mortgage process. The CTC is the goal line. The CTC is when the mortgage underwriter signs off on the loan. The CTC is when the lender is ready to prepare the closing docs and wire the money to the title company.
The final step of the mortgage process before the home closing is clear-to-close. The clear-to-close is the ultimate goal for all parties involved, from the homebuyers, sellers, loan officers, processors, real estate agents, title companies, and other third-party professionals.
There are certain steps leading to clear-to-close. The mortgage process starts with the pre-approval process. The borrower gets qualified by a loan officer. The loan officers make sure borrowers meet the minimum credit score requirements. Furthermore, the loan officer must ensure the borrowers meet the debt-to-income ratio requirements of the particular mortgage loan program.
First Stage of The Home Loan Process Leading to a Clear-To-Close
The steps leading to closing in the mortgage process are qualifying and getting the borrower pre-approved. Once qualified, the borrower gets a pre-approval letter from the loan originator. With a pre-approval letter, the homebuyer can go shopping for a home. Once the home buyer decides on a particular home that he or she wants to purchase, they enter into a real estate purchase contract
Once the buyers and sellers sign the real estate purchase contract, the contract is then submitted to the loan officer. This is when the mortgage process begins.
The loan officer will gather all necessary docs, such as two years’ tax returns, two years’ W2s, most recent paycheck stubs, two months’ bank statements, asset accounts such as 401k and investment accounts, and pertinent documents.
Getting The Mortgage Application Prepared For Underwriting Approval
Once the documents are collected, the loan officer will submit the package to the processing department. A mortgage processor will be assigned to the file. The mortgage processor will make sure that there are no missing items.
If applicable, borrowers need to provide bankruptcy documents, foreclosure docs, short sale paperwork, divorce decree, child support paperwork, alimony paperwork, and other paperwork needs to be provided.
The mortgage process will ensure all documents are legible and labeled properly for the underwriter. The processor will ensure all paperwork is updated, such as having the most recent paycheck stubs and bank statements. The mortgage processor will then submit the file to the underwriting department.
The Underwriting Step of The Mortgage Process
After the mortgage process has the borrower’s file complete, labeled, and fully organized, the file is then submitted to the lender’s underwriting department. Mortgage underwriters will not waste time if the file is incomplete, missing pages, or not legible.
Underwriters have many files to underwrite daily and cannot be stuck in one file. Therefore, if a file is sloppy and not legible or has missing documents, it will get kicked back to the mortgage processor.
If it is kicked back to the mortgage processor, the file gets in the back of the line for underwriting again. This can cause a delay in the mortgage process. Getting a conditional loan approval will get delayed, and the clear-to-close may get delayed. If the clear-to-close gets, the home loan closing can get delayed.
Conditional Mortgage Loan Approval
Many experienced processors will not submit a file to underwriting unless every single piece of document is present. It may take a few days to get certain documents. Experienced mortgage processors will wait until they get that document before submitting it to underwriting.
To avoid stress during the mortgage process and avoid delays, mortgage processors need to prepare the borrower’s file meticously and label it accordingly before submitting it to the underwriting.
Some processors will submit whatever documents they have and have the underwriter condition the missing docs on the conditional loan approval. This is a bad habit; the last thing you want is conditional loan approval with dozens of conditions. The fewer conditions on the conditional loan approval, the quicker the clear-to-close will be issued.
The Role of The Mortgage Underwriter
A mortgage underwriter will be assigned to the mortgage file. The mortgage underwriter will go over the file. Underwriters will ensure the file is complete and meets all the mortgage guidelines. The underwriter will thoroughly review the borrowers’ credit scores, credit history, income docs, asset information, and letters of explanation.
Once the mortgage underwriter feels comfortable with the applicant and sees that the borrower meets all guidelines, he or she will then issue a conditional mortgage loan approval.
Once the underwriter issues a conditional loan approval, the file returns to the mortgage processor. It is the mortgage processor’s job to gather all the conditions the mortgage underwriter requests. The loan originator is notified of the conditions. With the loan officer’s help, the mortgage processor works together to get the conditions.
Clearing Conditions For a Clear-To-Close
Once the borrower submits all the conditions, the processor will return the mortgage file to the mortgage loan underwriter for a clear-to-close. A clear to-close is great news. A clear-to-close means the lender is ready to fund the loan and send the closing paperwork to the title company.
Once the clear-to-close has been issued, the mortgage company’s closing department will contact the title company and make plans on a closing date.
The mortgage company will prepare and send the docs to the title company. At closing, once all closing docs have been signed and approved, the lender will wire funds. The homebuyer will get the keys, and ownership will change hands.
The Clear-To-Close
By this stage in the mortgage process, you are breathing a sigh of relief as you are in the final stages. Congratulations, you have made it through the hard part! Once you get the clear-to-close, the file goes to the closing department. For borrowers and loan officers.
Receiving the clear-to-close is like music to your ears! Once you receive the clear-to-close, the lender, realtor, and closing agent will work together to schedule a closing date.
The lender will work to prepare the required documents to be signed at closing. After receiving your clear-to-close (CTC), quality control checks will occur. Do not be alarmed if the QC process asks additional questions. This ensures that all the proverbial I’s are dotted, and T’s are crossed. It is a formality to protect the lender.
Steps of The Mortgage Process After The Clear-To-Close
Three days before closing, borrowers will receive a series of disclosures. Final disclosures outline your loan details, including the cash-to-close. Upon receiving disclosures, it’s important to acknowledge them, as there are timing requirements for closing. Before closing, you will prepare a certified check to cover your cash-to-close.
- Borrowers will also be given instructions on what they need to bring to closing, which will likely be your certified check, driver’s license or state-issued identification, and social security card.
Congratulations on making it to this stage. You are within a few days of homeownership! The Team at Gustan Cho Associates specializes in FHA, VA, USDA, Non-QM, Reverse Mortgages, FHA rehab loans, Conventional Loans, Jumbo Mortgages, One Time FHA and VA Construction Loans, Mortgage One Day Out Of Bankruptcy and Foreclosure, and alternative financing. Gustan Cho Associates has zero lender overlays on government and conventional loans.
Starting The Mortgage Process With a Lender With No Overlays
This article on the steps leading to a clear-to-close was written to inform our borrowers of the mortgage process. Gustan Cho Associates is a national mortgage company licensed in multiple states with no overlays on government and conventional loans. Over 80% of our borrowers at Gustan Cho Associates could not qualify elsewhere due to their lender overlays.
This holds true as long as the automated finding per Automated Underwriting System renders an approve/eligible, borrowers are set to go. This is because there are no lender overlays.
Many borrowers of Gustan Cho Associates have credit scores under 600 FICO. Many lenders require higher credit scores due to their overlays. FHA, VA, USDA, Fannie, and Freddie do not require borrowers to pay off outstanding collection accounts to qualify for these mortgages.
One Stop Mortgage Lending Shop
Over 80% of Gustan Cho Associates’s borrowers are folks who either got denied by another lender at the last minute due to one reason or another or due to their overlays. High-balance collection and charge-off accounts do not have to be paid off to qualify for home loans. We have a national reputation for being a one-stop lending shop.
Gustan Cho Associates are experts on consumer, business, commercial, and residential loans. Gustan Cho Associates has the states, products, and the lowest rates.
If you need a national one-stop mortgage lender with no overlays on government and conventional loans, contact Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com. We are also consumer, business, commercial, and non-QM loan experts. We have dozens of non-QM wholesale lending partners. Our non-QM mortgage, one day out of bankruptcy and foreclosure, is one of our most popular non-QM loan programs. The team at Gustan Cho Associates is available seven days a week, evenings, weekends, and holidays.
