Mortgage Loan Terminology
Explanation of The Mortgage Loan Process


1. Initial Consultation 15 - 30 minutes
2. Pre-Qualification 0 - 2 business days
3. The Initial Application 1 - 2 business days
4. The Work Write-up 5-7 business days
5. Title and Appraisal 7 - 9 business days
6. The Underwriting Process 5-9 business days
7. Conditions 4 - 5 business days
8. Clear to Close 3-4 business days
9. Scheduling the Closing
10. Total Estimated Time Frame 25 – 40 business days


1. Initial Consultation

Before you start your mortgage loan process, you should first consult with the Renovation Loan Guy. Why is this so important? First, the initial consultation is designed to help ensure that the mortgage loan consultant (loan officer) and the Borrower understand each other and are on the same page. In order to help you find the right mortgage loan for you, I must know exactly what you’re trying to accomplish. Otherwise, you may end up with a mortgage loan that does not serve your best interest which may ultimately cost you thousands of dollars in unnecessary interest payments and/or prepayment penalties. Also, it is important that you, the borrower, understand what the mortgage consultant can and cannot do in regards to what you are trying to accomplish. I use the initial consultation to gather information from the borrower, which is critical in helping them develop a personal mortgage plan.

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2. Pre-Qualification

Pre-qualification starts the mortgage loan process. Once I have gathered information about a borrower's income and debts, a determination can be made as to how much the borrower can pay for a home. In the current mortgage environment I require a full set of documents and a mortgage credit report prior to issuing a prequalification letter.

In attempting to approve homebuyers for the type and amount of mortgage loan they want, mortgage loan lenders look at two key factors. The first factor is the borrower's ability to repay the mortgage loan and the second factor is the borrower's willingness to repay the mortgage loan.

The borrower’s ability to repay the mortgage loan is verified by their current employment and total income.
The borrower's willingness to repay the mortgage loan is determined by examining how the property will be used. For instance, will you be living there or just renting it out? Willingness is also closely related to how you have fulfilled previous financial commitments, thus the emphasis on the Credit Report and/or your mortgage rental payment history.

My role is to structure a mortgage loan proposal that:

1.) satisfies as many of the mortgage loan borrower’s requirements as possible
2.) satisfies ALL of the mortgage loan Lender’s requirements

It is important to note that in some instances, ALL of the mortgage loan borrower’s requirements cannot be met in order to comply with the mortgage loan lender’s requirements.

It is also important to remember that there are no rules carved in stone. Each applicant is handled on a case-by-case basis. So even if you come up a little short in one area, your stronger points could make up for the weaker ones. However, I MUST first be able to structure your mortgage loan in a way that caters to your strong points. I understand this basic principle; therefore, you can be confident that they will work hard to place you in a mortgage loan program that is best suited for you..

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3. The Initial Application

Once the mortgage loan borrower has decided on a mortgage loan program and mortgage loan rate, the mortgage loan officer will prepare the mortgage loan application and initial mortgage loan documents for signing. Upon signing the mortgage loan application and initial mortgage loan documents, the borrower must provide the remaining required documents needed for the mortgage loan. I will have provided you with a list of these required documents. The initial mortgage loan documents will contain estimates of the various fees and closing costs associated with the mortgage loan. These mortgage costs and fees are verified by the Good Faith Estimate (GFE) and the Truth-In-Lending (TIL). These mortgage loan documents must be received within three days of submission of the mortgage loan application to the mortgage loan lender.

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4. The Work Write Up

The work write up is the process in which the buyer obtains an estimate for the repairs to be performed on a home. They may do this thru a contractor or a licensed HUD Fee Inspector, or both, depending upon the loan program. Once the work write up is complete the homeowner will sign a contract with the contractor for the work to be performed.

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5. Appraisal and Title

Once I receive the work write up I will order the appraisal and preliminary title. . The appraiser will complete the assignment based upon the repair estimates.

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6. The Underwriting Process

Once a “full” mortgage loan package has been assembled, my processing team submits the package to the mortgage loan lender’s underwriting department for review and decision. The underwriter is responsible for determining whether the mortgage loan package is deemed an acceptable mortgage loan or not. If the mortgage loan is approved, but more information is needed, then the mortgage loan underwriter will issue an approval with “conditions”.

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7. Conditions

Conditions (sometimes called “Stips” or Stipulations) consist of additional information needed by the mortgage loan lender’s underwriting department in order to satisfy ALL of the mortgage loan lender’s requirements. Sometimes the conditions may be as simple as an additional signature or current bank statement. Other times, conditions may consist of providing proof that a debt or lien has been satisfied or verifying that the current month’s mortgage loan has been paid. Once ALL of the mortgage loan lender’s conditions have been satisfied, the mortgage loan underwriter will issue a “Clear to Close” to the mortgage loan officer.

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8. Clear To Close

The Clear to Close is a document issued by the mortgage loan lender’s underwriting department which gives the mortgage loan borrower and the closing agent permission to close the deal. It is EXTREMELY important to understand that regardless of when the mortgage loan borrower, the seller, and/or the realtor wants to close the deal, the mortgage loan lender via its underwriting department ULTIMATELY decides when the deal will close via the “Clear to Close”. Because of this, the mortgage loan borrower should be advised that he/she SHOULD NOT make any definitive plans regarding closing the mortgage loan deal until the "Clear to Close" has been issued by the mortgage loan lender. Many times, especially on purchase mortgage loan deals, the realtor, the seller, and the buyer will set a closing date for a mortgage loan deal well before the “Clear to Close” has been issued by the mortgage loan lender. Quite often, they will coordinate the closing even before the Mortgage Loan Company or mortgage loan officer have been chosen. Unfortunately, more times than not, the end result is not a pleasant one.

For example, a new home buyer coordinates with the seller and realtor to close the mortgage loan deal at the end of the month. Based on this arrangement, the mortgage loan borrower issues a notice to vacate his/her apartment for the end of the month, schedule time off from work, and hires movers to handle the move. The mortgage loan application gets delayed in underwriting because some unforeseen conditions were issued by the mortgage loan lender. These conditions cannot be satisfied by the end of the month. The mortgage loan borrower is faced with no place to live, movers on the clock, a wasted day off work, and a very unhappy seller who is threatening to void the contract and sell the home to another interested buyer.

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9. Schedule the Closing

The mortgage loan lender will issue the mortgage loan officer the “Clear to Close”. My closing department will then notify the borrower’s attorney that they can coordinate a closing date and time.

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10. Total Estimated Time Frame

Please note that the Total Estimated Time Frame is only an estimate. The actual mortgage loan process may vary based on several factors. For example, a mortgage loan borrower who is well organized and responds to information requests from the mortgage loan officer quickly will help speed up the mortgage loan process versus a borrower who does not respond quickly. Also, the mortgage loan lenders underwriting times, the title and appraisal process, as well as, the closing agents booking schedule will vary depending on their respective work loads, which may be more or less than the estimated time frames indicated above.

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© 2010 The Renovation Loan Guy.
CT Loan Originator License #70333.

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