• Kolton Morrison

What the heck is a loan condition?

You have applied for financing with a loan officer. Your loan officer has done what she or he needs to do and gathered all the supporting documentation in efforts to get you approved for your loan. She or he has then sent your file to underwriting for the underwriters to look through everything with a fine tooth comb. What is next? If all goes well but just a few items need to be cleared up your loan will be approved, but only “conditionally.” Kind of like air conditioning but not to make you more comfortable. Conditions are to make the investors who are lending the money more comfortable.

So basically, you are good to go if the conditions are satisfied. Some examples of a condition would be the need of a letter of explanation on why there was a credit inquiry on your credit report from company ABC, or showing proof of homeowners insurance that will cover or guarantee replacement of your home. There are a plethora of potential conditions. The underwriters create the conditions to just check and then double check all is well so you can be approved for your home financing.

Once the required conditions are fulfilled by you and your loan officer, they will be reviewed and if cleared your file will be approved. With over a thousand files that I have worked on, not many have had zero conditions from the get go. When a very clean file is slapped with a silly condition, it seems as if it is a requirement for the underwriter to require a condition to simply show they have reviewed it. Many times my processing team or myself will go back to the underwriter and ask if it is really necessary or that we already provided information to clear the condition. So, do not be alarmed by any conditions. The underwriter is just doing their job and most of the time the condition is legitimate and needed. If there are conditions, when your loan officer lets you know what they are and asks you to get anything to her or him, do not delay. Get it done right away. Everything is time sensitive to get your file closed as soon as possible within deadlines for a purchase and or a rate lock expiration on a refinance. Taking your time can only cost you in the end.

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