Conditional Approvals & Funding
What happens after we have filled out the application, supplied the supporting documents and chosen a lender & product
A conditional approval is a type of preliminary approval that a lender may provide to a borrower after an initial review of their application and supporting documentation. A conditional approval indicates that the borrower meets the basic eligibility criteria for a loan but that final approval is still pending.
A conditional approval typically means that the lender has reviewed the borrower's credit score, income, employment, and other financial information, and has determined that the borrower is likely to qualify for the loan, subject to certain conditions. These conditions may include additional documentation or verification of information provided by the borrower, as well as a property appraisal, if applicable.
Once the borrower has satisfied the conditions of the conditional approval, the lender will review the updated information and documentation and make a final decision on whether to approve the loan. If the lender is satisfied with the updated information and documentation, they will provide a final approval and the loan can proceed to closing.
With a conditional approval, a commitment letter is a document provided by a lender to a borrower that outlines the terms and conditions of a loan that the lender has agreed to provide.
The commitment letter will include details such as the loan amount, interest rate, repayment terms, and any fees or charges associated with the loan.
The lender commitment letter is an important document for the borrower, as it provides them with certainty that the loan will be available on the specified terms. However, it is important to note that the commitment letter is not a guarantee of funding, as the lender may still withdraw the loan offer if certain conditions are not met or if the borrower's circumstances change.
The funding stage of the mortgage process is the final step in the process of obtaining a mortgage loan. This is the stage where the lender disburses the funds to the borrower to complete the purchase or refinance of the property.
During the funding stage, the lender will review the loan documents, including the loan agreement, the closing disclosure, and the title documents, to ensure that everything is in order. They will also verify that the borrower has met all of the conditions specified in the loan commitment letter, such as providing proof of insurance and completing any required repairs.
Once the lender is satisfied that all of the conditions have been met, they will prepare the loan documents for funding. This typically involves wiring the loan funds to the lawyer or title company, who will then disburse the funds to the appropriate parties, such as the seller, the real estate agents, and any other third-party service providers.
Once the funds have been disbursed, the mortgage is considered closed, and the borrower officially owns the property or has completed the refinance of their existing mortgage. The lender will then begin servicing the loan, which includes collecting the monthly payments and managing the escrow account if applicable.
Overall, the funding stage is a critical step in the mortgage process, as it represents the culmination of the borrower's efforts to obtain financing and complete the purchase or refinance of their property.