A Look at the Mortgage Underwriting Process in California

Home buyers tend to have a lot of questions about the mortgage underwriting process in California. That’s partly because this process happens without their direct involvement, for the most part.

What is underwriting? What does the underwriter do? How long does the process take, on average? Today, we’ll address these and other common questions related to mortgage underwriting in California.

Let’s start with a basic definition…

Mortgage Underwriting in Plain English

Mortgage underwriting is a process through which lenders (A) measure the risk associated with a certain loan, and (B) ensure that the loan complies with the lender’s minimum guidelines.

It is the underwriter’s job to determine if the risk of lending to a particular borrower is acceptable. He or she does this by examining the borrower’s credit score, debt-to-income ratios, employment and income documents, and all other financial documents included in the loan package.

During this process, the underwriter will ensure that the borrower meets the requirements set forth by the lender, as well as the requirements of government entities (when applicable).

In addition to using their own internal guidelines, most lenders adhere to the underwriting guidelines established by Freddie Mac and Fannie Mae. Secondary guidelines can also come from the Federal Housing Administration or the Department of Veterans Affairs — for FHA and VA home loans, respectively.

As a borrower, you might move through the underwriting process with no issues whatsoever. In that case, your loan would move toward the final closing and funding stage.

In other cases, a borrower might receive some additional requests from the underwriter. For instance, the underwriter might ask for a letter of explanation for a certain bank transaction or credit issue. Once the issue is resolved, the loan can move forward.

How Long Does the Process Take in California?

So, how long does the mortgage underwriting process take? It can vary quite a bit actually, because every applicant is different.

In California, mortgage underwriting can take anywhere from a couple of days to over a week. (Or longer, in rare cases.) When you consider all of the different conditions that can arise at this stage, you can understand why it varies so much.

The type of home loan being used, the borrower’s credit history, the sources of down payment and closing cost funds. These and other variables can affect both the length and complexity of the mortgage underwriting process in California.

At Bridgepoint Funding, we work closely with our clients to ensure the process goes as smoothly as possible. We also team up with highly skilled and efficient underwriters, to expedite the mortgage underwriting stage.

Related: How long does loan approval take?

The Home Stretch: What Happens After Underwriting?

If the underwriter determines that the loan is an acceptable risk based on the lender’s guidelines (and it conforms to other external requirements, such as FHA, VA, or Freddie Mac), he or she will give it a green light.

In industry jargon, this is sometimes referred to as being “clear to close.” You have cleared the mortgage underwriting process, and you are now on track to close the deal and receive funding.

At this stage, the escrow company will begin to prepare all of the closing documents. These are the finalized documents the home buyer / borrower must sign before the deal can be closed.

These days, many (if not all) of the closing documents can be signed digitally to reduce the need for face-to-face meetings. Once the documents are signed, you have officially closed on your home.

Summary of key points:

We’ve covered a lot of information in this article. Here’s a quick rundown of the key points:

• Mortgage underwriting is one of the key stages during the loan approval process.
• The timeline can range from a couple of days to a couple of weeks, on average.
• The process can vary from one borrower to the next, due to a number of factors.
• Borrowers can expedite the process by handling requests in a timely manner.

Disclaimer: This article provides a basic overview of the mortgage underwriting process / timeline in California. Every mortgage scenario is different because every borrower is different. As a result, portions of this article might not apply to your particular situation. You may also encounter additional underwriting steps not mentioned above.