Once a prospective homeowner has decided to embark on the mortgage application process, there is a phrase that they will find themselves running into often: conditional approval. It is only natural for a would-be homeowner to have questions about the topic. That’s why this guide is here to help everyone who is looking to learn more about the ins and outs.
What Is Underwriting?
In order to learn more about conditional mortgage approval, the applicant must educate themselves when it comes to underwriting. Mortgage underwriters go through the entire application. They will look over the paperwork, credit records and income documents. If the application has been given a conditional approval, that means that the applicant will need to provide the missing information. Additional clarification may also be necessary.
On the bright side, a conditional approval is only offered to those who fit the general guidelines for full approval. Sometimes, it is as simple as providing a missing document. As long as the necessary information is still provided, the process can continue as planned.
What’s a Pre-Approval?
Anyone who is getting serious about purchasing a home will need to learn about the pre-approval process. In many instances, buyers will not know the difference between the pre-approval and the conditional approval. It is easy to see why this would be the case. After all, the applicant is going to be submitting most of the same paperwork for each of the applications.
There is one key difference between the two that cannot be ignored, though. The pre-approval must take place before the conditional approval. The documentation review is not as thorough as it would be for the conditional approval process, either. The conditional approval is considered to be much stronger than a pre-approval. As long as the applicant meets the necessary criteria, they are likely able to purchase a home.
Finalizing a Decision
So let’s say that the applicant has already gotten their conditional approval. At this point, it is only right to wonder what additional information the underwriter will need in order to finalize their decision. These items are also referred to as conditions but not to worry! They are easily fulfilled.
The applicant must submit their pay stubs and this should go without saying. In addition to the pay stubs, employment and income verification are needed. Bank statements and tax returns are a must. Asset statements and a list of existing debt obligations must be provided upfront as well. The underwriter needs all pertinent information about the property that is being purchased. Lastly, FHA, USDA or VA loan applicants have to provide additional paperwork.
Is The Process Lengthy?
The process of buying a home can be anxiety-inducing, especially for those who have not done it before. That’s why so many applicants will want to know if the process of receiving a conditional approval is lengthy. Fortunately, this stage of the process moves as quickly as possible. In most instances, the process of receiving a conditional approval only takes one to two weeks.
Of course, there are ways to ensure that the process moves even faster. By making sure that all documentation has been completed and all of the paperwork has been handled, this makes life easier for all parties involved. An underwriter’s job is much simpler when they do not have to deal with an unorganized applicant. These easy steps can definitely cut a few days off of the process.
If there are any additional questions about conditional approvals and what they mean for prospective homeowners, please be sure to contact the professionals. Take a moment to speak with local mortgage advisors, so that they can help guide the way.
Hey, this is Johny Sehgal. I am the owner and caretaker at Finance Jungle. I completed my education in BSC and now heading towards the digital marketing industry. I usually have interests in reading, playing games and watching movies. I also love to write content based on quality information. The main motive of mine is to provide the top and best quality information to my readers. Finance Jungle is the blog for the same.