Appraisal / Approval

[Anonymous]

Greetings!

So we started the process to get approved for a mortgage.  We got  pre-approved...found a home...found a loan officer (at a bank)...found a realtor, etc, etc.  The 'final' paperwork that goes to the underwriter, was submitted on june 27th or thereabouts...long story short, i was told last week that the appraisal 'has been ordered' - by the bank. Led me to believe that an appraisal would not be ordered, unless we were approved, but, that does not necessarily have to be the case.

Well, fast forward...today i sent him a text and said 'no news is good news' - he replied yes...we are waitng on appraisaal...they will send us a 'needs' letter soon, but just waiting on appraisal...i wrote back and said, so does that mean we are approved otherwise (meaning other than just waiting on the appraisal) and then I asked, what is a 'needs' letter - wasn't sure if that was a text 'typo' or if there is actually something called a 'needs' letter...he didn't reply, so i don't know if he got a client or what. So i'm reaching out to the forum to see if anyone can answer.

thank you in advance.

[RobertEG]

It sounds like their normal reservation that there may be need for a possilbe "letter of explantion" when the underwriter does their final review.

The underwriter must compare their guidelines and your documents to determine if you fit the criteria to borrow the amount you requested. 

If something cannot be explained in the loan file, then they will ask for any information needed to fill the gap and complete the loan file.  That information can come in a form of a "letter of explanation. "

These letters are then retained in case the Government or another underwriter has to review the file.  Missing or incomplete files could mean penalties for the banks. 

[Anonymous]

Thanks...that's what I thought too.