Once you submit your application it goes to underwriting. Underwriting is about making sure the details of your loan, the property, and your financial situation align with and meet standards set by organizations like Fannie Mae and Freddie Mac. These organizations help keep the mortgage market stable by buying loans from lenders and backing mortgage securities.
Now, the time underwriting takes can vary. For some “straightforward loans” (think: you’re buying a single family home with a conventional loan, have had the same job with a salary for 2 or more years, good credit, no major debt, etc.), underwriting can be done in just a few days—plus the time it takes for an independent appraisal. But for more complex situations, such as when you’re buying a condo or you don’t have a W2, it might take longer.
For example, if you have other debt, we want to figure out exactly where it’s coming from and whether it’s a good or bad signal. Maybe you took out a loan to invest in expanding your business. We want to look at your overall financial picture to get you the best terms possible.
How Tomo Mortgage does underwriting
The traditional underwriting process can take 30+ days and have a lot of hiccups along the way. That’s because other lenders run things in a linear, step-by-step fashion. If there’s an issue with one part of your application (like your employer not responding to a verification request), the entire process grinds to a halt until that one issue is resolved. Your application goes back into the queue, and the cycle can repeat with every new issue.
Here’s where we’re different: Tomo Mortgage uses a “concurrent” underwriting process. Instead of tackling one thing at a time, we check multiple “conditions” all at once. You might have a lot of things to do all at once, but that’s on purpose. If something needs to be resolved by you, we send it over immediately while we continue working on the rest of your application. This way, we can keep the process moving smoothly and avoid endless back-and-forth. It’s faster, more predictable, and a big reason why we close on time, 98% of the time, while the industry standard for on-time close rate is only 40%.
What does an underwriter look for in a loan application
Underwriting is when your lender checks all the boxes on a loan application—and there are a LOT of boxes, each with their own little nuances and confirmation steps. And it’s all very regulated—lenders aren’t just being fussy, they have to ask about this stuff.
To give you a clearer picture, here are some of the categories our underwriters dig into to protect homebuyers and ultimately give the best and safest loan possible:
- Income: For example, we need to confirm your employment to see how much of your income comes from your salary versus bonuses over the past two years.
- Assets: We need to verify the funds you have available in your bank accounts or other assets. We also want to see that you’ve saved enough for the down payment, closing costs, and a bit of a cushion.
- Credit: For example, we’ll dive into your credit score, payment history, and current debt to verify everything is accurate.
- Application: For example, we need to review your residential history, employment history, current residence, and previous residences, as well as spot-check details to ensure the story of the loan is correct.
- Title Search: We check the property’s title to ensure there are no legal issues or disputes.
- Property Appraisal: We need to make sure the home’s value aligns with the price tag. This involves an independent appraisal to confirm the property’s worth (which can add time to the underwriting process, as this is a third party).
- Debt-to-Income Ratio (DTI): We calculate your DTI to ensure you’re not financially stretched too thin. A lower DTI is a positive sign.
What can cause a delay in the process
The time it takes to get through underwriting can be unpredictable. For instance, if we’re waiting on a document from your employer, that can cause delays. Some documents might get submitted the same day, while others might take a week. Our goal is to make sure you’re properly protected, so we’re thorough and diligent in checking every detail.
If you’re in a time crunch, no worries. Tomo Mortgage’s faster process means we can usually push things through in under 12 days, especially if your loan is straightforward and your paperwork is in order. If everything’s in order with your file, we may even be able to move up your close date approved ahead of schedule. Just let your Loan Officer or Application Advisor know ASAP, and they’ll do everything they can to make it happen.
But the best thing you can do to speed things along is provide all requested documents right away and respond quickly to any additional requests. The faster you move, the faster we can get you to closing.
What happens after the underwriting process
After you move through underwriting, here’s what’s next:
- Conditional approval: If everything’s looking good, you’ll probably get a conditional approval. This means your lender is pretty much onboard but might need a few more things from you, like extra income docs or clarifications. Get those sorted ASAP to keep the momentum going.
- Final approval: Once you’ve knocked out those conditions, it’s time for the big green light—final approval. Your loan is officially a go, and you’re almost at the finish line.
- Closing disclosure (CD): A few days before closing, you’ll get a Closing Disclosure. This doc lays out all the final terms of your loan—interest rate, monthly payments, closing costs, the works.
- Closing day: The moment you’ve been waiting for! You’ll sign a mountain of paperwork, pay your closing costs, and—if all goes smoothly—get the keys to your new home.
- Loan funding: After all the signatures are done, your lender will fund the loan, meaning the money goes to the seller and the deal is sealed. You’re now the proud owner of a new pad. Cue the housewarming party!
With Tomo Mortgage, you can rest easy knowing that our process is designed to get you there as smoothly and quickly as possible.
