Subject to Conditions: Debunking Common Assumptions

hey guys welcome back to another week of Mortgage Matters and Minutes again I'm your host Brent Rasmussen Owner of Mortgage Specialists and always here to provide you some great education information about the mortgage industry and generally what we see kind of going on in the real estate market so today the title is subject to what conditions and this might not make a lot of sense to everyone out there because it's a question that our clients sometimes ask us especially the more organized ones the ones that don't like to see any problems and we have a proprietary software that allows us to stay in touch with the clients throughout the process so as soon as we get underwriting back as soon as we order an appraisal sometimes we get clear to close and also as soon as we have documents out of the title company uh we stay in touch with the client mine meaning the borrower about what is going on with the process and communicate with them with text emails and sometimes live videos but what subject to conditions really means is After we receive underwriting back and what underwriting means is that we take all of your information generally on a purchase once we get a contract for you to buy a home back we get your updated pay stubs bank statements driver's license signed loan documents or disclosures we get that all submit to underwriting and if we have every single piece of paper that we need your loan will be done and finished but generally speaking we submit things so quickly and fast that we're not maybe going to have an appraisal or we're not going to have the title work back or maybe there's an earnest deposit that hasn't cleared your account yet or deposit that's in your account we haven't been able to verify yet so what is subject to conditions mean it is a legal terminology that the underwriters come back with and say hey we've reviewed your loan everything about your credit income assets make sense everything about this loan makes sense and you qualify by the rules that are written by the secondary Market subject to these conditions and they're going to list out and every loan that you would work with or every lender that you work with they're going to have this sheet called a condition sheet a conditions list and I would tell you most condition lists are very very easy some condition lists if you you get a bad submission or maybe not an organized loan processor or maybe not an organized loan officer you might get a very long list of questions and items the underwriter has for you here at Mortgage Specialists obviously our goal is to make it as smooth and as seamless of a process as possible to make sure at the end of the day we're closing on time with the least amount of speed bumps in the road so I can attest that when we receive underwriting back because of our process because of our years of experience we see that condition list to be very very small and one of the text messages that goes out to clients is hey your loan is now approved subject to conditions and some people ask immediately what are those conditions and they get really nervous hearing the word subject to conditions meaning they're subject to some weird thing that needs to happen but in our lending environment subject to conditions is very much a normal terminology that we use within our industry when we tell someone the loan is approved we can't tell them your loan is done because it's not we might be waiting again on items like appraisals Earnest deposits and title work which usually comes down to having some time being passed weeks or two weeks into the process that makes sense I would tell you again most the items that underwriting is asking for are out of your control but the items that are being asked for we do reach out and give you a simple checklist of saying here are the final items that you need to give to us in a simple checklist we call and phone call to discuss those with you and say Here's the things in more detail we need and as soon as you submit that stuff to us then generally you're done with the paperwork that's needed for underwriting so in our world at Mortgage Specialists here we like to have you dig up documents generally twice well at the beginning for the pre-approval one after the underwriter reviews your loan and approves it and comes out with the subject to conditions that gives us the list the final items that we need can underwriting ask something throughout the process of something additional they always can they always can add something if they find something on a document that we submit later on but I would tell you generally speaking 99% of time rule the standard list that we turn around and submit is all the final things that you need so to finish your loan all you need to do as a borrower is follow a checklist submit the items that we need and your loan is basically done minus the appraisal and title work that again is out of your control but it's as simple as getting a loan is going through those checklists and finishing up paperwork sometimes it's only one or two items sometimes it might be five or six and sometimes if it's really a more complicated situation we might see five to ten items which is very very rare so once we again submit everything to underwriting have them review the final items your loan is approved and we call that clear to close a lot of people assume that once a loan is done and being underwritten there's no way that underwriter is going to change their mind and their loan is good forever again agreement between an underwriter and A lender and a borrower is only subject to a certain period of time they're not going to give you an unlimited amount of time to be able to close they're also not going to give no conditions for they can't make adjustment or change so if something happens like you lose a job you add a debt or a liability that Underwriters still can come back and review those items so again in summary we're looking at the words called subject to conditions and what does that mean we use this terminology again a lot with the clients writing purchase offers and that they may request or may tell their seller hey I've already been through underwriting and I have a loan commitment which a loan commitment is the exact same thing that we have been chatting to and talking about here which is subject to conditions again a commitment to lend means hey we will give you a loan subject to you doing this this and this which is providing paperwork and providing items and an appraisal and title work so many times you can speed up your process to get to closing much quicker with a loan commitment which is the same thing as getting underwriting done and completed having the underwriter tell us what's needed and you to work from getting those items before you submit an offer to agree to purchase a home everybody generally meaning Sellers and sellers agents are much happier because they know there's not going to be one more extra possible issue that happens throughout the process and you can also get to closing that much quicker with a loan commitment I.E subject to conditions so thanks for tuning in here we believe in education highly at mortgage Specialists you can always phone call us with any questions you may have at 402-991-5153 or on our website at www.mtg-specialists.com thanks so much we look forward to talking to you soon have a great rest of your day

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