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Step 5: Approval

Congratulations—you've made it to the approval stage! This is where your loan transitions from "under review" to "ready to close." You'll receive your commitment letter, lock your rate, and clear any final conditions before heading to the closing table.

What to Expect​

StageDurationWhat Happens
Final Underwriting1-3 daysLast review of complete file
Conditional ApprovalDay 3-5Approval with remaining items
Condition Clearing1-5 daysYou provide final items
Clear to Close (CTC)Day 5-10Final approval issued
Rate LockAnytimeLock your interest rate

Total Timeline: 3-10 days (varies based on condition response time)

The Approval Process​

Conditional Approval​

Most loans first receive "Conditional Approval" (also called "Approved with Conditions"):

What It Means:

  • Loan is approved in principle
  • Specific items still needed
  • Once conditions cleared = final approval

Why It's Normal: Nearly every loan gets conditional approval. It doesn't mean something is wrong—it means the underwriter needs a few more items verified before giving final sign-off.

Final Conditions​

Common Final Conditions:

ConditionWhat's Needed
Final VOEVerbal verification you still work there
Updated Bank StatementMost recent statement showing funds
Insurance BinderProof of property insurance
Clear TitleTitle report with no issues
Appraisal SatisfactionAny appraisal repairs completed
HOA CertificateFor condos/HOA properties
Final Credit RefreshConfirm no new debt

Clear to Close (CTC)​

"Clear to Close" is the magic phrase. It means:

  • ✅ All conditions satisfied
  • ✅ Final approval granted
  • ✅ Loan documents can be prepared
  • ✅ Closing can be scheduled

What Happens at CTC:

  1. Underwriter signs off on file
  2. Loan documents ordered
  3. Closing team notified
  4. Closing date confirmed

Understanding Your Commitment Letter​

What Is a Commitment Letter?​

A commitment letter is the lender's formal promise to fund your loan. It outlines:

  • Loan amount approved
  • Interest rate (if locked)
  • Terms and conditions
  • Expiration date
  • Remaining conditions

Key Sections to Review​

Loan Terms:

Loan Amount: $400,000
Interest Rate: 7.75% (locked)
Loan Term: 30 years
Monthly Payment: $2,863.42 (P&I)

Conditions Remaining:

  • List of items still needed
  • Timeline for providing them
  • What happens if not provided

Expiration:

  • When the commitment expires
  • Rate lock expiration
  • Extension options

Important Disclosures:

  • Prepayment penalties (if any)
  • Escrow requirements
  • Rate adjustment terms (if ARM)

Review Carefully​

Before celebrating, verify:

  • ✅ Loan amount matches your needs
  • ✅ Rate matches what you were quoted
  • ✅ Terms match your expectations
  • ✅ No surprise conditions
  • ✅ Timeline is achievable

The Rate Lock Process​

What Is a Rate Lock?​

A rate lock freezes your interest rate for a specified period, protecting you from rate increases while your loan processes.

When to Lock​

Lock TimingProsCons
EarlyProtection from rate increasesRisk of extension fees if delayed
LateMore certainty on closingRisk of rate increases
FloatPotential for better ratesRisk of rate increases

Our Recommendation: Lock when you have conditional approval and clear path to closing.

Lock Periods​

PeriodBest ForNotes
15 daysVery fast closesCheapest but riskiest
30 daysStandard closingsMost common choice
45 daysComplex dealsSome rate premium
60 daysLonger timelinesHigher rate premium

Lock Costs​

Rate locks may include:

  • Lock fee: 0-0.25% of loan amount
  • Extended lock fee: 0.125-0.25% per extension
  • Re-lock fee: If lock expires and you need new one

Lock Expiration​

If your lock expires before closing:

  • May need to re-lock at current rates
  • Extension fees may apply
  • Worst case: rates have increased significantly

Protect yourself:

  • Choose appropriate lock period
  • Clear conditions quickly
  • Communicate timeline issues early

What Can Go Wrong (And How to Fix It)​

Issue: Last-Minute Employment Change​

Problem: You switched jobs or your employer changed.

Solution:

  • Notify your loan team immediately
  • Provide new employment documentation
  • May need new underwriting
  • Could delay or affect approval

Prevention: Don't change jobs during the loan process!

Issue: New Credit Activity​

Problem: You opened new credit or made large purchase.

Solution:

  • Disclose immediately
  • Provide documentation
  • May affect DTI calculation
  • Could change approval status

Prevention: No new credit until after closing!

Issue: Appraisal Problems​

Problem: Value came in low or repairs required.

Solution:

  • Renegotiate price with seller
  • Bring additional cash
  • Request appraisal reconsideration
  • Complete required repairs

Issue: Title Issues​

Problem: Liens, judgments, or clouds on title.

Solution:

  • Work with title company to resolve
  • Payoff liens from closing proceeds
  • Obtain releases from prior creditors
  • May delay closing

Issue: Insurance Problems​

Problem: Can't get insurance or it's too expensive.

Solution:

  • Shop multiple carriers
  • Consider higher deductibles
  • Look at specialty insurers
  • May need to walk away from deal

Tips for Smooth Final Approval​

1. Respond to Conditions Immediately​

Time is critical at this stage:

  • Conditions = countdown clock
  • Every day matters
  • Rate locks are ticking

2. Keep Documents Current​

You may need updated versions of:

  • Bank statements
  • Pay stubs
  • Insurance quotes
  • Any time-sensitive documents

3. Don't Celebrate Too Early​

Until you have "Clear to Close":

  • No major purchases
  • No new credit
  • No job changes
  • No large deposits or withdrawals

4. Stay in Communication​

Keep in touch with:

  • Your MoneyMatcher advisor
  • Your loan officer
  • Your real estate agent
  • Your closing attorney (if applicable)

5. Prepare for Closing​

While waiting for CTC:

  • Review closing disclosure
  • Arrange wire transfer
  • Schedule time off for closing
  • Confirm moving plans

Final Approval Checklist​

Before you're truly "Clear to Close":

Underwriting:

  • All conditions cleared
  • Final credit check complete
  • VOE completed
  • Appraisal accepted

Title:

  • Clear title confirmed
  • Title insurance ordered
  • Any liens resolved

Insurance:

  • Insurance binder received
  • Meets lender requirements
  • Premium payment arranged

Funds:

  • Cash to close confirmed
  • Wire instructions received
  • Funds ready to transfer

Schedule:

  • Closing date confirmed
  • Location confirmed
  • All parties notified

What Comes Next​

After Clear to Close:

Step 6: Closing → Learn More

  • Sign final documents
  • Wire closing funds
  • Receive keys
  • Celebrate!

Frequently Asked Questions​

Q: What does "conditional approval" mean?​

A: Your loan is approved pending completion of specific items. This is normal—most loans receive conditional approval before final approval.

Q: Can my approval be revoked?​

A: Yes, in certain circumstances:

  • Major credit changes
  • Job loss or change
  • Undisclosed debts
  • Fraud or misrepresentation
  • Property issues

Keep everything stable until closing!

Q: When should I lock my rate?​

A: Generally, lock when you have conditional approval and confidence in your closing timeline. Your advisor can help you decide.

Q: What if rates drop after I lock?​

A: Most locks don't allow "floating down." Some lenders offer float-down options for a fee. Ask your lender about their policy.

Q: How long from approval to closing?​

A: Typically 3-7 days after Clear to Close, depending on scheduling and document preparation.

Need Help?​

Questions about your approval?

So close to the finish line—we're here to help you across!