Once you receive a conditional approval, you want nothing more than to close your loan. Conditions mean that you can’t close quite yet, though. So just how long do you have to wait until you hear the magical words, ‘clear to close’? Keep reading to find out.
What are the Conditions?
First, determine what conditions the lender requires. A few common conditions include:
- Clear title search
- Proof of homeowner’s insurance
- Subsequent proof of income
Each situation will require different conditions. Every loan requires an appraisal (unless you are refinancing with the FHA or VA streamline program), every loan requires a clear title search, and homeowner’s insurance. But your specific situation may require satisfaction of other conditions, such as proof of clearance of an old collection or a written Verification of Employment from a part-time employer.
The number and complexity of the conditions the lender requires help determine how long it will take you to get to the closing table.
How Fast Will You Cooperate?
A lender can give you a list of conditions, but it’s up to you to satisfy them in most cases. If you can satisfy the condition, such as those that have to do with your current liabilities, income, or assets, you need to provide the documentation quickly for fast results. If you sit on the conditions for a while, the lender can’t move forward with your loan.
Some conditions, however, are outside of your control. The appraisal, for example, isn’t your responsibility. The seller must schedule the appraisal with the appraiser. Sometimes sellers can put this off or delay the process. You also cannot control the title search and examination. You are at the mercy of the title company for this one.
In general, though, the faster you provide what the lender requires, the faster you can get to the closing table. If you have conditions outside of your control, continually following up with the lender and/or appropriate parties can help speed things along.
What’s the Lender’s Turnaround Time?
Each lender operates on its own timeline. Before you choose a lender, ask about its turnaround time. Are they backed up at the moment? Do they take a few hours, a few days, or more than a week to turn around conditions? This should help you choose the right lender or at least help you understand your timeline when waiting for your final approval.
Do You Satisfy the Conditions?
If you don’t satisfy the conditions the lender created, you won’t be able to close on the loan. Even though the conditions are new, you still have to satisfy them. Lenders are free to ask for anything that they need even after the pre-approval. It’s important that you figure out a way to satisfy the conditions if you want to get to the closing table.
Even though it may seem unfair that the lender suddenly wants 12 months’ worth of bank statements rather than just two months or they want proof of payment of a few collections, it’s to make sure that you are a good risk. When lenders pre-approve your loan, they do so based on the limited information they have. As the underwriter digs deeper and gets more information about your financial profile, other conditions pop up that they need satisfied in order to feel good about giving you a loan.
Waiting for the Final Approval
You need a final approval to get to the closing table. A conditional approval means the lender approves your loan based on what they’ve seen so far. They still need further information to make that final determination.
Once you receive that final approval, you’ll hear the loan officer say that you are ‘clear to close.’ At this point, you have no more conditions to satisfy. Don’t get too comfortable just yet, though. Many lenders take a few more steps before you sign on the dotted line. Typically, lenders will:
- Pull your credit one more time to make sure nothing changed
- Verify your employment to make sure that you didn’t change jobs or become unemployed
Once the lender knows beyond a reasonable doubt that nothing changed, you can finally sign on the dotted line and finish the mortgage process.
It could take a few days or a few weeks to go from conditional approval to final approval. It depends on many factors, of which you play a vital role. Work closely with your lender to get the fastest results for your loan.