I’m asked regularly about mortgage related time-frames…as sometimes clients need to close their transactions quickly.
Instead of getting conditionally approved in a few days (or even 24 hours – like what was happening about 15 years ago), loans are thoroughly processed before even landing on the underwriter’s desk.
Because there are a ton of regulations and timelines lenders have been forced to work with, the average loan closing will take anywhere from 20 to 40 days, depending on many circumstances.
This means the actual loan approval might take a couple weeks, but it will generally be a firm one with few if any remaining conditions.
Interestingly, around the mid-to-late 2000s, mortgages could close really quickly. This was partially because underwriting guidelines were much more flexible (and some might say ‘non-existent’), and also because lenders were well-staffed and very competitive.
However, those days have changed, due to a myriad of factors.
The Pre-Qualification in Key
In order for a real estate agent to best help you find that right home, it’s vitally important to know how much “house” you can afford. That’s why you should reach out to the right Mortgage Professional first, before you contact an agent and start looking at houses.
Your chosen lender should sit down with you to assess your goals and objectives – and then help you choose the optimal loan program that best fits your needs. The first step in this process is the pre-qualification.
Home sellers and their real estate agents generally insist that home buyers submit a valid pre-qualification letter along with their initial offer for the home.
Essentially, sellers don’t consider offers from people who haven’t taken the time to determine if they can even get approved for a loan in the first place.
You can find out more on pre-qualifications here…
Why Do Mortgages Take So Long?
- Many different parties are involved in the mortgage and/or home buying transaction
- There are regulated timelines that must be followed
- The home appraisal can also take up to a few weeks to be completed
Like most things in the mortgage world, it’s difficult to generalize because every loan (and every borrower) is uniquely different. With that said, here are a few reasons why the loan process takes a bit:
So it’s best to be patient and cooperative to ensure a smooth closing!
Complex and Elaborate
The mortgage process is very involved and requires a lot of hands to touch the loan before it actually closes.
We’re talking a loan officer, an underwriter, a processor, an appraiser, a title company, escrow company, an insurance company, a funder, a closer, and possibly more. That’s a lot of hands in the dough!
The same goes for mortgages.
Even in a best-case scenario…say you are a well-qualified borrower with a W-2 job, one bank account, and with excellent credit score with no recent activity…even refinancing a conforming loan, can still take several weeks.
Appraisals
Sometimes, the delay can be due to the home appraisal, which is essentially required to independently determine the value of the property in question.
Lenders will not lend if they don’t know the value of the property, so they will to order an appraisal. This process can take 5 to 10 days, depending upon the schedule of the appraiser.
This is why lenders will often want to book the appraiser early on so they can get it done and delivered to underwriting.
In Conclusion
The mortgage process isn’t the quickest, but that really can help buyers make sure the loan they are qualified for AND the property they are buying are the right fit.
I’ve done loans in as quick as 17 days, so if you are looking for an usually quick close, let me know and I’d love to help!
The blog postings on this site represent the positions, strategies or opinions of the author and do not necessarily represent the positions, strategies or opinions of Guild Mortgage Company or its affiliates. Each loan is subject to underwriter final approval. All information, loan programs, interest rates, terms and conditions are subject to change without notice. Always consult an accountant or tax advisor for full eligibility requirements on tax deductions.
