Is Underwriting the Last Step in the Mortgage Process?

The 2024 FHA Loan Handbook

Reader question: “We were informed that our loan is in the underwriting stage right now, but I’m not sure how that relates to the overall approval process. Does that mean we’re at the finish line, so to speak? Is underwriting the last step in the mortgage approval process?”

Let’s start with the short answer and expand outward from there. No, underwriting is not the final step in the mortgage process. You still have to attend closing to sign a bunch of paperwork, and then the loan has to be funded.

The underwriting process itself can be smooth or “bumpy,” depending on your financial situation. The underwriter might request additional information, such as banking documents or letters of explanation (LOE).

So you’re close to the last step — but not quite at the finish line.

Mortgage Approval Process

Is Underwriting the Last Step in the Mortgage Process?

Let’s look at the overall mortgage process, and how the underwriting step fits into it. Here’s a simplified explanation of the various stages:

  1. Origination: This is when you first apply for the loan, or get pre-approved by a lender. It’s also when you enter the real estate market and start looking for a house.
  2. Processing: Once you’ve found a home and made an offer to buy it, the mortgage lender will order an appraisal to determine the value. They’ll also gather a variety of loan documents and prepare or “process” them for the underwriter’s review.
  3. Underwriting: This is where the rubber meets the road, so to speak. During this step, the mortgage underwriter will review all documents relating to the borrower and the property being purchased, to ensure they meet all applicable guidelines. The underwriter might also identify certain “conditions” that need to be resolved prior to final approval and funding. (Learn more about conditional approval.)
  4. Closing: When the underwriter says that you’re loan is “clear” for closing, it’s time for you to sign some paperwork! You’ll sign a variety of loan documents, tax records and the like, and then you’ll get the keys to your new house. The actual funding usually takes place a day or two after closing, but this can vary.

As you can see, underwriting is not the last stage in the mortgage approval process. It’s one of the most important steps, because the underwriter is basically the “judge and jury” who decides if the loan can be funded. But it’s not the final step.

What the Borrower Should Do at This Stage

As a borrower, the best thing you can do at this stage is to stay in close contact with your loan officer and quickly handle any issues that arise.

If you’re lucky, you’ll sail through the underwriting process without a hitch. But if the underwriter does identify certain conditions that must be resolved, work to resolve them as quickly as possible. This will help keep the closing on track and prevent delays.

For example, it’s common for mortgage underwriters to request letters of explanation, or LOEs, regarding specific bank transactions. The sooner you provide the requested information, the sooner the underwriter can “clear” the loan for closing. This is what everyone wants, but sometimes it takes some cooperation to get there.

So stay in touch with your loan officer, who is probably your primary point of contact. And handle any information or document requests as soon as possible.

Where to learn more: This article answers the question: Is underwriting the last step in the mortgage process? If you would like to learn more about the various stages in this process, check out the list of “similar articles” on the right. You might also enjoy this guide to the six steps to mortgage approval.

Brandon Cornett

Brandon Cornett is a veteran real estate market analyst, reporter, and creator of the Home Buying Institute. He has been covering the U.S. real estate market for more than 15 years. About the author