What Does Loan Status In Progress Mean?

When applying for a loan, individuals frequently encounter various status updates, with “in progress” being a common one. This status can seem unclear, leaving applicants uncertain. Understanding what “in progress” signifies can provide clarity throughout the loan application journey.

Understanding “In Progress” Status

The “in progress” status on a loan application indicates the lender has received your submission and is actively evaluating it. This means the application is undergoing an internal review process where the lender verifies all provided information and documentation. It signifies the application is being processed and assessed for eligibility and risk.

The Lender’s Internal Review Process

Once a loan application is “in progress,” the lender initiates a thorough internal review to assess the applicant’s creditworthiness and the overall risk. This process starts with verifying the information provided, such as identity, employment history, and residence.

A significant component of this review is the credit assessment, where the lender pulls credit reports from major bureaus, analyzes credit scores, and evaluates the applicant’s historical payment behavior. Underwriters examine factors like payment history, credit usage, and any past derogatory events such as bankruptcies.

Lenders also perform income and asset verification to ensure the applicant has the financial capacity to repay the loan. This involves reviewing documents such as pay stubs, W-2 forms, and tax returns to confirm employment and income stability. For assets, bank statements, investment accounts, and other financial holdings are scrutinized to verify sufficient funds for down payments and reserves. For self-employed individuals, lenders may require business tax returns and profit and loss statements.

The underwriting review is a central part of this phase, where a loan underwriter assesses all gathered information against the lender’s specific criteria and guidelines. The underwriter’s role is to measure the risk the lender would assume by approving the loan and ensure the application meets all requirements. They synthesize data from credit checks, income verification, and asset reviews to make an informed decision.

For secured loans, such as mortgages or auto loans, collateral evaluation is also conducted. This involves appraising or valuing the asset being offered as security to ensure its value is sufficient to cover the loan in case of default. The appraised value helps determine the loan-to-value ratio, which influences the loan terms and amount.

Applicant Actions During the “In Progress” Phase

While a loan application is “in progress,” applicants have several responsibilities to facilitate a smooth and timely review. Promptly responding to any requests from the lender for additional information or clarification is important. Delays in providing requested documents or answers can extend the “in progress” period and postpone a decision.

Applicants should closely monitor communication channels, including email, phone calls, and any online applicant portals, for updates or requests from the lender. Ensuring all contact information is current with the lender can prevent missed communications. Being proactive in checking the status through these channels is also advisable.

Maintaining financial stability during this period is also important. Applicants should avoid making significant financial changes, such as taking on new debt, making large purchases, or changing jobs. These actions can alter the applicant’s financial profile, potentially impacting the lender’s assessment and leading to further review or even a change in loan terms. Closing existing credit accounts can also negatively affect a credit score and should be avoided.

Navigating Post-Review Statuses

After the “in progress” phase concludes, a loan application will typically transition to one of several statuses, each with distinct implications. The most favorable outcome is “approved,” meaning the lender has decided to grant the loan based on the assessment. This usually leads to the finalization of loan documents and scheduling of the closing process.

Another common outcome is “conditionally approved,” which indicates the lender is willing to approve the loan, provided certain conditions are met. These conditions often involve submitting additional documentation, resolving discrepancies, or fulfilling specific requirements such as a property appraisal or a down payment gift letter. The loan becomes fully approved once all stated conditions are satisfied.

Conversely, an application may be “denied” if it does not meet the lender’s underwriting criteria or risk assessment. Federal law requires lenders to provide an adverse action notice within 30 days of a denial. This notice explains the specific reasons for the denial, such as insufficient credit history, high debt-to-income ratio, or inadequate collateral. It also informs the applicant of their right to obtain a free copy of their credit report within 60 days to review the information used in the decision.