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Final approval from the underwriter: What happens next?

Peter Miller
The Mortgage Reports contributor

In this article:

Achieving final approval from the underwriter is a big deal. Congratulations — but don’t celebrate yet. You’ll go through a few more steps before you get your keys.

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

Ready to buy a home? Start here. (Jul 15th, 2019)

Final approval from the underwriter

What’s an 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. (Jul 15th, 2019)