Your loan under contract: from mutual acceptance to clear to close

The first five days: application and the Loan Estimate

Form 22A ¶1(a) requires you to make application for the loan within the days written in the blank, five if left empty, after mutual acceptance. The form defines application narrowly: your name, income, Social Security number if required, the property address, the purchase price and the loan amount. Those are the same six items that start the federal clock, so once your lender has them, two things happen at once.

On the contract side, you have met the ¶1(a) deadline. Get that confirmed in writing by the lender, because ¶1(b) says that missing the deadline means the financing contingency is deemed waived, and with it ¶5, the low-appraisal protection. On the federal side, the lender must deliver a Loan Estimate within three business days of receiving those six items. The Loan Estimate shows your rate, payment, estimated closing costs and cash to close.

One more ¶1(b) rule to know now: changing loan type at any time, or changing lenders after the application window closes, without the seller's written consent on Form 22AC, also waives the contingency. If you are considering a switch, talk to your agent before you do anything.

What the lender collects, and the rate lock

Expect the lender to ask for recent pay stubs, two years of W-2s or tax returns, two months of bank and asset statements, identification, and explanations for anything unusual. Self-employed buyers provide business returns and often a profit-and-loss statement. Gift funds need a gift letter and a paper trail showing the transfer. The lender will also pull credit again and order the appraisal.

Respond to document requests the same day. Underwriting queues are first-in, first-out, and a file that sits for a week waiting on a bank statement loses its place.

Your interest rate is not fixed until you lock it. A rate lock is a commitment from the lender for a set number of days, commonly 30 to 60, at a stated rate and cost. Locks that expire before closing can be extended, sometimes for a fee, so the lock period should cover the Closing Date with room to spare. When to lock, and for how long, is a conversation with your loan officer based on your Closing Date and the market that week; this guide does not offer rate advice.

Underwriting, conditions and clear to close

Once your file is complete, an underwriter reviews it against the loan program's guidelines and issues a decision. The common first result is a conditional approval: the loan is approved subject to a list of conditions. Some are routine, such as a final verification of employment, evidence of homeowner's insurance, the appraisal, and a clear title commitment from the title company. Others are specific to you, such as a letter explaining a deposit or an updated statement.

You clear conditions by supplying what is asked. When every condition is satisfied, the underwriter issues the clear to close, which tells the closing department to prepare final documents and the Closing Disclosure.

Between clear to close and funding, the lender runs final checks. Most re-verify employment by phone a day or two before closing, and many pull a soft credit refresh to see whether anything changed since application. This is why the next section matters so much.

The Closing Disclosure and the three-business-day rule

Federal law, administered by the Consumer Financial Protection Bureau under what the industry calls TRID, requires your lender to make sure you receive the Closing Disclosure at least three business days before consummation, the day you sign the loan documents. The Closing Disclosure is a five-page form showing the final loan terms, closing costs and cash to close. Compare it line by line to your Loan Estimate and ask about anything that moved.

For this rule, a business day is every calendar day except Sundays and federal legal holidays. If the disclosure is mailed rather than delivered or acknowledged electronically, it is presumed received three business days after it is sent, which pushes the earliest signing date out further. Certain changes after delivery, such as an increase in the annual percentage rate beyond the regulation's tolerance, a change in loan product, or the addition of a prepayment penalty, require a corrected disclosure and a new three-business-day wait.

Form 22A ¶8 anticipates this. If the lender must re-disclose for one of those reasons, you may give notice and the Closing Date is extended for up to four days. That paragraph survives even if you waived the financing contingency.

How the contingency protects you, and when it lapses

Form 22A makes the agreement contingent on you obtaining the ¶1 loan. If you cannot, and the contingency is still in place, ¶4 lets you terminate by notice on or before the Closing Date. The earnest money is refunded only if the lender confirms in writing to the seller, within 20 days, your application date with a copy of the Loan Estimate, that you had sufficient non-contingent funds, and the reasons the loan was not obtained.

How it ends depends on the ¶2 box. Under ¶2(a), the default, it survives until you waive it in writing or the seller delivers a Notice to Perform on Form 22AR after the days written, 21 if left empty, and then a Notice of Termination if you have not waived within three days. Under ¶2(b), it is deemed waived after the written period, 21 days by default, unless you have terminated.

Waiving is a real decision; once waived, a denial leaves your earnest money exposed under Form 21's default provisions, so your agent will review your loan status first. Until funding, stay financially still:

• No new credit cards, car loans, furniture financing or co-signing
• No job changes, no move from salaried to contract income
• No large deposits you cannot document with a paper trail
• No moving money between accounts without telling your loan officer