Loan Approval

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Loan Approval
Loan Approval means that the borrower meets the lenders qualification requirements and also its underwriting requirements. In some cases, especially where approval is provided quickly as with automated underwriting systems, the approval may be conditional on further verification of information provided by the borrower.

A home buyer who has a loan approval has the good faith knowledge that they are dealing with a mortgage broker or mortgage professional who knows their products and has found them the best mortgage program for their needs.

The loan approval will outline what documents that are required to close on this loan. The loan approval will detail the parameters of the approval in regards to loan amount, loan to value, interest rate, and monthly payment.

Final loan approval means that your mortgage loan has been approved, all conditions of the approval have been met and you are ready to close your home loan refinance or purchase transaction. Some basic conditions that are usually required on all loans to be met before a final approval will be issued are: documenting and verifying employment and income, obtaining and having an appraisal of the collateral property reviewed and deemed acceptable and verifying homeowners insurance is obtained and paid for.

Once a conditional loan approval is recieved the Loan Officer, Loan Processor and borrower need to work together to get the conditions satisfied just as soon as possible. Most conditional loan approvals will have an expiration date and often times there is a rate loack on the loan which can also expire so time is of the essence. For example, a common approval condition is for a property appraisal. Borrowers must understand that they should not delay in arranging with the appraiser for the inspection of the property - this is something that often causes delays in getting final approvals.

If all the conditions cannot be met then the loan will not get a clear to close. Your mortgage broker may have to take it to another lender with looser guidelines.

Loan Approval also means that you are only a few days from your final closing. The only steps remaining are arranging for the final documents to be delivered to the title company or closing attorney and having the lender wire the funds. You loan officer should also review the final facts and figures with you to confirm everything and ensure a smooth closing process.

Almost 99% of all loan approvals are conditional. This means you have to meet certain conditions to get your loan. When you first receive your approval, your broker will know exactly what the lender wants for your loan to be funded.

Even after you receive loan approval, the lender will verify your employment again, and may check your credit again. Do not take loan approval as permission to quit or change jobs, to buy a car, to rent furniture, or to allow a mortgage or credit card payment to be more than 30 days late.

Loan approval is provided by the lender when the borrower has satisfied all of the requirements to obtain a loan. Your mortgage broker will guide you through this process so it goes smoothly.


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 Information listed above is to be used for educational purposes only and is not guaranteed

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