After your loan approval, the pre-funding review acts as the lender’s last safeguard before finalizing the transaction. Typically conducted 24 to 72 hours before closing, this review verifies that your financial status remains consistent with the information used during underwriting.
During this process, lenders perform a soft credit inquiry to detect new debts, credit inquiries, or missed payments without impacting your credit score. They also confirm your employment status through a Verification of Employment (VOE), often via a quick employer call to verify your current job and income. Additionally, lenders request updated bank statements to ensure the funds for your down payment and closing costs remain intact and check for unusual transactions that could require documentation to comply with anti-money laundering regulations.
For mortgage loans, the review includes verifying that the property title is clear of new liens and that insurance policies like homeowner’s and title insurance are in place.
Common issues that can arise from this review include new debts elevating your debt-to-income ratio beyond acceptable limits, job changes that reduce income stability, or large financial withdrawals that reduce your available assets. Any significant discrepancies can delay or even pause your loan closing.
To avoid these issues, it’s essential to maintain your financial situation as it was during application. Avoid opening new credit accounts, refrain from large purchases, stay employed in your current job, and keep funds in place until the loan closes.
For more insights, see our article on the Final Loan Package to understand the comprehensive review process as loans approach closing.
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