The LOAN ESTIMATE disclosure is provided to the borrower three business days of their loan application. In the typical case, the first Loan Estimate is sent before the borrower’s property is appraised, and before the loan terms (interest rate and points) are locked.

In preparation for the closing, the buyer will be receive a copy of the final Closing Disclosure from their lender. The Closing Disclosure (CD) is the similar to the Loan Estimate form the buyer signed with the application. The CD will include the exact numbers (vs. the estimates available at the start) and will itemize any items already paid for throughout the transaction up to close (appraisal deposit / deposits with offer and purchase and sale).

Appraisal. If you are buying a home, the appraisal is typically ordered after the Purchase and Sale document is signed. When the lender receives the appraisal report, it is reviewed by underwriting and then provided to the borrower.

Underwriting Approval. Once processing has a complete loan application with supporting income and asset documents, they will submit the loan to underwriting. Underwriters will review the application, supporting documentation and lender guidelines. They will then either issue a “conditional approval or possibly deny or suspend the file. Assuming the loan is approved 🙂 their may be “conditions” to the approval that need to be resolved before they can issue a “clear to close”.  Examples may include documenting the source of a large deposit,  writing a letter explaining employment history, providing updated pay stubs, or missing pages of a bank statement.

After the initial underwriting approval (conditional approval) is issued, the file is sent back to processing to work on getting the items requested by the underwriter.

Final approval. Congratulations! This means that at the very least, all prior conditions have been met. At this point, loan documents can be prepared.

The final Closing Disclosure will be provided to borrowers a minimum of three business days prior to closing.  Borrowers should check the Closing Disclosure carefully as soon as they are received in order to avoid the pressure and inevitable errors that occur if they are read for the first time at the closing table. The focus of your examination should be the loan pricing information and other critical features of your loan. You want to assure yourself that the deal you are getting is the one you negotiated to receive. 

It is CRITICAL that the borrowers e-sign and return the Closing Disclosure to the lender ASAP. The lender must fulfill a three day waiting between receipt and signature of the final CD and the actual closing The three day waiting period CANNOT be waived and has the potential of delaying the closing if not executed and provided to the lender in time.

Cash to Close from Borrower: At the bottom of the “Summaries of Transactions” section is a line item labelled “Cash to Close from Borrower”.  If you agree with the amount you must provide a certified check for that amount at closing.