A mortgage approval generally reflects a financial institution's commitment to lend against real property. If you are approved for a mortgage loan, you may receive funding based on a variety of conditions. Mortgage approvals are typically valid for a limited amount of time. A loan officer typically informs prospective borrowers about time-sensitive approval dates.

Application

An application process commences a borrower's pursuit toward a home loan. Whether a borrower is seeking to buy a home or to refinance an existing loan, a lender will require documented information about the applicant. Details about your recent earnings, residency, and bill-payment history are prerequisites for a mortgage approval. Banks and mortgage lenders typically will ask for documents such as pay stubs, bank statements and recent tax records.

Underwriting

Underwriters are employed through banks and other financial institutions to review a borrower's mortgage application and other requested documents. An underwriter must review a subject property against the value and the condition of comparable properties before issuing a commitment to lend. Property records and title information gets reviewed by an underwriter, too. Generally, an underwriter is responsible for determining if applicants meet an institution's established approval guidelines.

Loan Decision

A decision to lend is based largely on an institution's acceptable risk factors. Applicants who meet a lender's financing conditions usually are granted a mortgage approval. Real estate contracts typically require borrowers to provide proof of financing. Borrowers who are buying a home can request a written mortgage approval from their lender. If you receive a final loan approval, lenders generally will deem your loan as cleared to close. Your loan officer then can schedule a closing of escrow to finalize the funding process.

Summary

A closed loan represents a funded transaction. Lenders require applicants to produce requested information in a timely manner during the approval process. After a lender has approved your request for a mortgage loan, you must complete the closing of escrow before the expiration period. Mortgage approvals consist of recent verified information. As your data ages or changes, lenders may become vulnerable to a variety of risks. Lenders have various expiration periods. Certain lenders may issue a 30-day loan commitment or a 60-day loan commitment. For clarification, ask your loan officer when your mortgage approval will expire.