You know what loan conditions are. That is if getting a home loan isn’t your first rodeo. The first time upon receiving your first batch of conditions you might have been taken aback a bit. And when I say ‘batch’ it means rarely is there just one loan condition but a few. Maybe even more than a few. But loan conditions aren’t a bad thing.
In fact, it’s an indication that you’re getting closer to full loan approval, there are just a few more things to be tied up. The other side of the coin is the opposite of an approval. The loan file is returned to the loan officer in its entirety without any request for conditions. Of course, if this happens, your loan officer didn’t do you a very good job getting your loan prepared in the first place.
In my many years of lending, I don’t recall a home loan submission ever going through underwriting without conditions. Maybe there is a perfect loan out there but I’ve never seen it. Perfect in the sense the loan file went to underwriting and sailed straight through without having any further questions answered. When your loan officer calls and says something to the effect of, ‘Hey we have a preapproval but there are a few things we need to send in before we can order closing papers’ that’s something that should let you start packing your things and preparing to move.
But there are basically two types of conditions- a pre-funding condition and a pre-doc condition. The pre-funding condition means you’re just a step away from having your loan documents, or ‘docs,’ sent over to your settlement for signing. At this particular stage, you’ve already submitted your pre-doc stuff.
Pre-doc conditions mean there are some things that need to be taken care of that underwriting wants some clarification before your loan papers can be ordered. This might mean something like providing an updated profit and loss statement on your business if you’re self-employed. Or maybe there was a short period where you were out of work but are now gainfully employed. Underwriting might want a little more information.
Pre-funding means there are simply a few ‘i’s to dot and ‘t’s to cross and once that’s accomplished, you’ve already signed your loan documents because of your pre-docs being satisfied. Now it’s the simpler stuff. Stuff like submitting a new paycheck stub that’s less than 30 days old or an updated bank statement. When you send in your pre-funding conditions, the next thing is to wait on the keys to your new home.