This is one of the largest transactions that you will ever have in your life. Things can go wrong in a big way, quickly, so you should find a loan officer who can guide you through all of the pitfalls and challenges and help you close your loan with as little stress to you as possible.
Paez has more than 12 years of experience helping homeowners and home buyers with real estate financing. Paez also has experience doing commercial loans and loans for developers. He writes extensively on real estate financing and other subjects for several blogs and Web sites.
Why is My Loan Taking so Long? By Daniel Cohen. Low appraisals are another reason for the delay in mortgages. Underwriters can add conditions on an approval. Appraisals and Reviews There are a number of reasons why loans are taking so long to close. Documents and More Documents The number one factor in borrower fatigue is the sheer amount of documents that borrowers have to produce in order to get a loan done these days.
Credit Reports Even borrowers with a great credit score can be put through the wringer, when it comes to information on their credit report. Premature Rate Locks One of the biggest mistakes that newbie loan officers make is to lock in a loan rate too soon. Since October , then, closings have had an additional three days tacked on; a government-mandated delay affecting all closed loans. Shorter locks are ideal, but not always available. When your mortgage loan is submitted for approval to a bank, there are roughly seven separate steps in the loan application process.
What follows is a brief explanation of each step, and what you might be able to do to speed your loan along. Note: For best results, the first three steps can — and should — be completed prior to shopping for a home.
This means your loan is conditionally-approved — assuming you can support the information provided above with supporting paperwork and documentation. Typically, this paperwork includes pay stubs, W-2 statements, federal tax returns, and account statements for your savings and retirement accounts.
Other documentation requests may include copies of business licenses, gift letters for down payments, and proof that a student loan is in deferment. Reviewing your loan paperwork is a task typically completed within two days, but it can sometimes take as long as a week.
Material changes include a change in employment, income, credit, marital status, or down payment. However, they do require that your loan get re-underwritten and re-approved.
This could lengthen the closing process considerably. So avoid making any financial changes prior to closing, if at all possible.
As the next step in the mortgage approval process, your mortgage lender will schedule a home appraisal. Appraisals can take up to a week to complete, depending on the property.
Scheduling this second home appraisal can add another week to your closing, which can increase your mortgage rate and closing costs. This is a rare occurrence, however. As the borrower, your closing conditions may include finalizing your homeowners insurance policy, depositing your down payment into an escrow account with the title company, and signing your final set of mortgage documents. After the lender has issued its final approval, the only thing left to do is to close on the mortgage.
Any of these events could cause your approval to be revoked. Only after your loan is funded and money has changed hands can the loan be considered final. They give homeowners a chance to change their mind and cancel the loan entirely. The three-day Right to Cancel cannot be waived and must be figured into the mortgage rate lock period. About two weeks, typically. Your mortgage underwriting process could take longer if you have a low credit score or are self-employed and need to submit tax transcripts to document your income.
But delays can still happen at different stages in the process. The full mortgage loan process often takes between 30 and 45 days from underwriting to closing. But turn times can be impacted by a number of different factors, like:. Under normal circumstances, initial underwriting approval happens within 72 hours of submitting your full loan file. In extreme scenarios, this process could take as long as a month. In addition to shopping interest rates and closing costs, turn times should be one of the final factors in your ultimate choice of a lender.
Underwriters look closely at your financial situation. They need to verify the information you gave on your mortgage application by checking it against your documentation. Being conditionally approved is usually a good sign. There are many factors that can influence the processing time for mortgage loans.
As a borrower, the best you can do is stay in touch with your loan officer and be patient. There are some common scenarios that can lead to a longer processing time. Here are some factors that might cause a mortgage lender to take a relatively long time with processing. As a result of these and other government regulations, mortgage lenders might take a long time to process and approve loans longer than in the past, anyway.
Loan officers, processors and underwriters, oh my! And additional documents might be requested at each stage. Think of a snowball getting larger as it rolls downhill.
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