Those are the sweetest words borrowers can hear when they’re looking forward to closing on a new home, or when they want to refinance their mortgage to obtain additional cash or lower their monthly payments.

So how do you get to the “end goal,” to the “finish line” otherwise known in the mortgage business as “cleared to close”?

What we always tell our borrowers is that the more complete a package, and the more thoroughly the application is prepared, the smoother the process and the quicker the results, which is a clear to close and the next best thing to the actual closing.

I also want to add as a side note that qualifying for a mortgage is different from being able to afford the mortgage, and I always suggest that an analysis and budget be done. As an example, there are underwriting guidelines that take into consideration your income, your liquid assets and your credit score and the liabilities that appear on your credit report. As we know, there are many liabilities that do not appear on a credit report, such as private school, outside family obligations and general daily living expenses. Lenders do not look at those things unless, of course, you charge some of them on your credit card. So I always suggest that you see what you qualify for and then consider what you feel comfortable with in terms of the total monthly mortgage payment.

Many people are busy and totally get stressed by the thought of getting financial documents together. Although it is possible to start off with lighter documentation, keep in mind that underwriters always reserve the right to ask for more down the line, and I can tell you it’s not fun scrambling at the last minute for an old tax return. I say start off with one month of pay stubs, and the last two years of tax returns. If you’re self-employed and you own more than 25 percent of the company, provide the last two years of the business returns, two months of liquid savings statements, and, if applicable, a purchase contract, or, if refinancing, a current mortgage statement. We also like to get the contact information on all advisers involved on the deal such as CPAs, financial planners, real estate brokers and insurance agents.

We then review the mortgage application and verify it against the financial information supplied.

We have a conversation with the borrower to see what they are trying to accomplish with the loan and property including timeline of ownership. We select the best mortgage product to assist in accomplishing that goal and make sure that everything fits into the underwriting guidelines. Many loans are straightforward, but in many cases they are not, especially if a person is self-employed.

The takeaway is if somebody is a square peg we make them fit into a round hole as long as they have something to work with. The application is then signed and disclosures go out. Disclosures consist of two important parts, one known as the intent to proceed and the other called the loan estimate, and once received, the appraisal is ordered.

The underwriter reviews the file while the appraisal is being taken and we wait to get the results on the appraisal. If the appraisal comes in at the value we need and passes quality control review, onward; if not, we see what the differences are and make decisions on the best direction to take depending on the nature of the transaction. Assuming the appraisal comes in for value, and if a thorough application was done, a mortgage commitment should be issued with minimal conditions. All mortgage commitments will have some basic conditions such as clear title, homeowners insurance and possibly some updates on pay stubs and savings statements.

I’m simplifying it but there is a lot of detail involved throughout the process, such as monitoring rate lock expiration; locking the rate at the right time; reviewing each piece of documentation thoroughly so that all information is accounted for, such as family gifts, new jobs, divorce issues and credit score changes; managing the back-and-forth between buyer and seller on closing dates; last-minute verifications of employment (don’t quit your job until after the closing—lol); large deposits in a bank account; etc. We work on clearing any conditions on the mortgage commitment and get the title report, and if it’s a refinance a payoff letter, speak to the underwriter, and quickly remove all conditions and surmount any obstacles, and then… We push for a clear to close! The end result being a new homeowner or a borrower who is now in a better position financially by refinancing their current mortgage.

By Carl Guzman

 Carl Guzman, NMLS# 65291, CPA, is the founder and president of Greenback Capital Mortgage Corp., a Zillow 5-star lender http://www.zillow.com/profile/Greenback-Capital/Reviews. He is a residential and reverse mortgage financing expert and a deal maker with over 28 years’ industry experience. Carl and his team will help you get the best mortgage financing for your situation and his advice will save you thousands! www.greenbackcapital.com [email protected]