Question 2. What does it mean to be
A. The 1003 Loan Application must be completed and signed by the loan applicant.
B. The credit report must be pulled by the broker/lender.
C. All necessary documentation needed to process the loan must be given to the broker/lender.
a. Pay Stubs.
c. 1099's (if self employed)
d. Bank statements (if applicable)
e. Copy of lease contract (if applicable)
f. Copies of settlement letters pertaining to any collections or charge off accounts appearing on credit reports.
g. Copy of Warranty Deed (if applicable)
D. A licensed appraiser, approved by the lender, must perform an appraisal on the subject property.
E. All documentation pertaining to the loan must be submitted to the lender's underwriting department to verify its accuracy and completeness. Once this has been done the loan can be approved. Underwriting can then issue a "Loan Approval" letter. Many times this letter is referred to as a "Commitment letter" or "Clear to Close Letter."
F. Technically, your loan is not approved until this "Commitment letter" has been issued.
Once the "Commitment letter" has been issued, the loan is formally approved. Anything can happen in the qualification process to cause a problem. Do not assume the loan is approved until your broker/lender has received this Commitment letter. Ask for a copy of the letter once your lender issues the letter. I have seen many loans fall apart at the very last minute due to unexpected problems. It's much better to be safe, than sorry, so keep in close touch with your broker/lender throughout the entire process.
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