Final approval from the underwriter: What happens next?

Peter Miller
The Mortgage Reports contributor

What happens after underwriting?

Achieving final approval from the underwriter is a big deal — but it’s not quite time to celebrate.

You’ll go through a few more steps before you get the keys to your new place.

The lender has to double-check your income and employment. And you still have final documents to sign and closing costs to pay.

Learn exactly what needs to happen after final approval to put your home sale over the finish line.

Ready to buy a home? Start here. (Apr 19th, 2021)

Final approval isn’t the final step

Once your mortgage underwriter has signed off on the loan, there are just a few more hurdles to clear.

  1. Your lender will conduct a final review, double-checking to make sure your documents are correct
  2. The lender will probably do a quality control check, pulling your credit report and verifying your employment one last time
  3. Ideally, you’ll get your closing documents a few days early to review before signing (request this)
  4. You’ll bring in your cash to close and sign your final documents

Some lenders will fund your loan almost immediately (table funding), while others may take a day or two to review the signed package first.

Find out how your lender does things to avoid unwelcome surprises.

Connect with a mortgage lender today (Apr 19th, 2021)

What is “final approval”?

“Final approval” on your mortgage loan comes from the underwriter. These are the individuals responsible for reviewing and analyzing all the paperwork lenders require.

After a first review, the underwriter will issue a list of requirements. These requirements are called “conditions” or “prior-to-document conditions.”

Your loan officer will submit all your conditions back to the underwriter, who then issues an “okay” for you to sign loan documents. This last verification is your final approval.

But that’s not the end of the story. You still need to sign documents and go through a post-signing approval process. Read on.

The quiet period: Don’t fall at the finish line

After final approval, you attend the loan closing (signing) and bring a cashier’s or certified check for your cash-to-close or arrange for a wire transfer.

In addition, you must avoid changing anything that could cause the lender to revoke your final approval.

Related: Quality control (your credit will be pulled at closing and could derail your home purchase)

For instance, buying a car might push you over the debt-to-income ratio (DTI) limit. So your loan application can be denied, even after signing documents. In this way, a final approval isn’t very final.

This really happens. Protect yourself. Once you apply for a mortgage, enter a “quiet” period. Do not spend money for anything but the basics until the loan is “funded.” Add nothing to your credit balances. Do not sign up for any new accounts.

Document review: LE vs CD

When you applied for a mortgage, the lender provided a Loan Estimate (LE) form which outlined your mortgage terms. Now, just before closing, you will receive a Closing Disclosure (CD) form. Check them both. Did you get your promised terms? If you have any questions, speak with the lender.

Related: Preparing for your real estate closing

To close as a buyer, you will almost always have to bring funds to closing. It’s okay to use a cashier’s check, certified check or to wire the money. You cannot bring cash to most title offices. Be sure to check with the closing agent if you wire money. Confirm that the wiring instructions are correct, especially the recipient account number.

Dry versus wet settlements

There is one final task which results from mortgage underwriting. The lender must fund the transaction. You can have a “wet” settlement when the lender’s money is disbursed at closing. This is also called “table funding.”

In addition, there are also “dry” settlements, in which the money is paid a few days after closing. Ask the closing agent how lender funding will be handled. A payment delay may make sellers cranky – if not worse.

The “final” final approval

Your loan is fully complete only when the lender funds the loan. This means the lender has reviewed your signed documents, re-pulled your credit, and verified nothing changed since the underwriter’s last review.

When the loan funds, you can get the keys and enjoy your new home.

Ready to buy a home? This is a great place to start. (Apr 19th, 2021)