If you’ve begun shopping for a new home and started working with a loan officer on the mortgage loan process, you likely know loan preapproval is key to making a solid offer on a house and to ensuring you’re financially able to make monthly mortgage payments. But did you know there is another stage in the process known as conditional approval?
Preapproval and conditional approval are not the same. What does a conditionally approved loan mean? And how does it differ from preapproval? We’ve got answers.
How does conditional loan approval differ from preapproval?
Preapproval on a mortgage loan means you’ve submitted an initial application, your OVM loan officer has reviewed it and pulled your credit report, and your loan has gone through the Automated Underwriting System (AUS). Preapproval is generally a critical first step before you make an offer on a house.
What is conditional loan approval?
Conditional approval is the point at which an underwriter has reviewed your loan application to confirm that loan approval can be issued for the home you have under contract (provided you meet certain conditions by the time of closing).
You’ll receive an e-mail from your loan officer explaining any possible conditions and a list of items needed from your side to reach full approval. Aim to send those items back to your loan officer as quickly as possible. Doing so will keep your loan on track to meet your desired closing date.
What can I expect after my loan is conditionally approved?
Once you’ve submitted any documents or completed the tasks requested by your loan officer, we will resubmit those items for final review. If all goes according to plan after resubmittal, your underwriter can issue full approval, also known as “clear to close.” When your loan is cleared to close, we will begin preparing your closing documents and confirm the final figures you’ll need to bring to the closing table.
How do I obtain conditional loan approval?
To receive conditional approval on your loan, make sure you have the following documentation available when you submit your Quickstart application:
- Recent pay stubs
- Two years of tax returns
- A letter verifying your employment status
- Bank account statements
- Profit and loss statements from your business (if you’re self-employed)
From there, our underwriting team will review your documents and determine if we can issue a conditional approval.
If you have more questions about gaining conditional approval for your mortgage loan, reach out to your OVM Financial loan officer for guidance. He or she can also advise you on how long it will take to get a loan approved and whether or not your credit score will affect mortgage preapproval.
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