I Submitted My Mortgage Application, Now What?
Mostly, the answer is: wait. Once you have completed your mortgage application, it will be processed by the loan underwriting department. Your application will be thoroughly reviewed by underwriters in order to assess whether or not you qualify for the loan. This process can take up to twenty full business days so that the underwriters can carefully assess all the provided documents.
When underwriters are puring over the details of your application, they may find red flags that need further exploration. For example, non-payroll bank account deposits from that are more than 10% of your income must have a source so it can be verified that the funds weren’t borrowed.
If the underwriter finds anything in your application that needs to be elaborated on, you might receive a letter of explanation request. A letter of explanation is a way that you, the borrower, can explain certain facets of your application such as overdraft alerts, missed payments, employment gaps as shown on tax returns, and unusually large deposits in accounts. Certain aspects of your application could cause you to not qualify for a mortgage, so you will need to write an excellent letter of explanation to avoid that.
When you’re writing your letter of explanation, make sure to be as specific as possible. Date every incident that requires explanation. Tell the underwriter exactly what happened in that situation, why it happened, and what you learned as a result. See if you can attach any supporting documentation, for example court documents, medical records, or even notes from your boss.
After you've been cooperative, timely and patient with the underwriting process, and all goes well, you'll experience a smooth transition into your loan closing.