How Quickly Can I Get a Mortgage?

How Quickly Can I Get a Mortgage?

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Why Do Mortgages Take So Long?

  • A lot of different parties are involved in the mortgage and/or home buying transaction
  • And there are regulated timelines that must be followed
  • The home appraisal can also take a couple weeks to be completed depending on how busy they are
  • So it’s best to be patient and cooperative to ensure a smooth closing

Well, 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 so on.

Have you ever tried to get a couple people to coordinate on one thing? Heck, it’s hard enough to get three people to agree to a time and place for dinner.

The same goes for mortgages. Even in the best-case scenario, where you’re a vanilla borrower with a W-2 job, one bank account, an excellent credit score with no recent activity, refinancing a conforming loan, it can still take several weeks.

Part of this delay is due to the home appraisal, which is usually required to ascertain the value of the property in question.

Lenders can’t lend if they don’t know the value of the collateral, your property, so they’ve got to order an appraisal. This process can take 7-10 days or longer, depending upon the schedule of the appraiser.

This is why lenders will often want to book the appraiser early on so they can get the darn thing done and delivered to the bank.

The good news is this can go on in the background while you and your loan officer (and loan underwriter) take care of the particulars on your loan.

This may entail gathering documentation, sending over Letters of Explanation (LOEs), and so forth.

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Step 3: Make An Offer

Your real estate agent can help you make an offer when you find the right home and you’re ready to buy. Your real estate agent will handle the job of writing an offer letter, which lays out the terms of the sale. In the pandemic housing market, your agent will probably advise making an offer over the asking price, waiving contingencies and being flexible on terms like the move-in date.

If you’re making an all-cash offer, you should consider attaching a Proof of Funds letter to your offer to show the seller that you really do have the cash on hand needed to complete the sale. If you’ll need a mortgage to complete the sale, you’ll attach your preapproval letter to your offer to show you’ve been vetted by a lender and are creditworthy.

Many home buyers in this market have cobbled together the cash to purchase the home and then applied for delayed financing after the mortgage has seasoned (usually 6 months).

In a more balanced market, sellers and buyers might haggle over details like the price, closing costs and any repairs that need to be made before closing. When the market is once again in an equilibrium, and both buyers and sellers have some power to negotiate, sellers might accept, reject or counter your offer.

Ways to speed up your loan closing

Fortunately, there are ways to be proactive with your home loan process.

Some things have changed in the application process for sure. However, you can almost always count on some “old faithful’s” when it comes to the documentation your lender will request.

It helps to have the following items readily available to your lender:

  • Copies of driver’s licenses and social security cards
  • Most recent two months of paycheck stubs
  • Most recent two year’s W2s
  • Most recent two year’s tax returns (all pages)
  • Most recent retirement account statements
  • Most recent two month’s bank statements (all pages)
  • Documentation to source any cash deposits into your bank accounts
  • Contact information for your homeowners’ insurance

Your lender may request additional items, but having these items handy will save you lots of time.

Why does the mortgage loan process take so long?

Getting a mortgage requires an inside-out review of your finances, including all income sources and any assets and debt you have. This thorough evaluation takes time, and if any part of your financial life can’t be substantiated, that can create delays as your mortgage lender assesses your risk as a borrower.

Similarly, if you have credit issues, you might have to step back from getting a mortgage altogether and take some time to improve your creditworthiness.

Within the process, there are also other factors that can impact a lender’s ability to issue a final approval for a loan, explains Peter Boomer, a mortgage executive at PNC Bank, including:

Still, not all mortgages take a long time to get to the finish line.

“Some close in as few as seven [days],” says Hanna Pitz, senior policy advisor at the Mortgage Bankers Association. “It all depends on the complexity of the underwriting and the ability of the borrower to produce the right documents at the right time. The more straightforward the borrower’s financial life is, and the more it is documented online, the easier it is for the lender.”

Big deposits

Your lender might also ask for additional paperwork if it sees several large deposits in your bank accounts. Your lender will ask for a letter explaining where this money came from. Your lender will also ask for supporting documents to verify the contents of your letter.

If you say that a $5,000 deposit was the result of selling your car, your lender will ask for the bill of sale verifying this. If you deposited $6,000 after a year-end bonus, your lender might ask for a letter from your employer stating that this bonus was actually real.

There’s a reason for this: Lenders want to make sure you are not receiving loans that you will have to pay back. If the money you are depositing does have to be repaid? Lenders need to count that as part of your monthly debt load.

Randall Yates, chief executive officer of The Lenders Network in Dallas, says that even the experience level of a mortgage loan officer can impact the time it takes to approve your loan.

“If you get an inexperienced loan officer who doesn’t know the right things to ask for, who doesn’t see the potential problems in underwriting before they come up, that can slow down your approval process,” Yates said. “I’ve seen times where it takes 90 days to close a loan because the loan officer didn’t properly prepare the borrowers.”

Finalizing your mortgage

Once the seller has accepted your offer, you can move forward with completing the mortgage process and taking possession of your new home. The first step is to decide which lender you want to use and the type of mortgage that’s best suited for you.

With a fixed-rate mortgage you’ll always know what your monthly principal and interest payments will be. Fixed-rate mortgages offer 10–, 15–, 20–, 25– or 30–year terms. An adjustable-rate mortgage (ARM) can offer lower early payments than a fixed–rate mortgage. An ARM offers a 30–year term with a fixed interest rate for 5, 7 or 10 years (based on the chosen product), and becomes variable for the remaining loan term, adjusting every year thereafter.

You can save in interest over the life of your loan by choosing a 15-year term over a 30-year term. Your monthly payment, though, will be higher.

Your lender will order an appraisal to determine if the purchase price of the home is comparable to similar homes in the area. The appraiser will examine the house and then compare it to similar homes that have recently sold nearby. While waiting for closing, it is essential that you don’t do anything that changes your financial situation, such as applying for new credit, changing jobs, or getting behind on your current credit payments.

Once your mortgage loan is approved, your lender will set a closing date.

Three business days before closing you’ll receive a Closing Disclosure. This document itemizes all of the funds and costs paid by the buyer and seller either at or before closing. This document will show the loan amount, interest rate, loan term, origination fees, title insurance, deposits for property insurance and taxes, homeowners insurance and any other fees. Review the Closing Disclosure carefully and compare it to the Loan Estimate you received to make sure there are no surprises.

You’ll receive a Final Closing Disclosure during your closing. This is the final version of the document you received 3 business days before closing. Check for any last minute changes.

The most common closing fees are:

  • Appraisal fee—For the estimate of your home’s market value
  • Attorney fees—For any legal representation to prepare and record documents
  • Inspection fee—For examining for structural problems; also for termites, lead paint in older homes and your roof
  • Origination fee—For processing and administering your loan
  • Underwriting fee—For reviewing your mortgage application
  • Title fees—For the search to verify there are no tax liens on the property and for insurance to protect you if a problem is discovered

Deciding to buy a home is a significant investment and not one to be taken lightly. Taking time to understand how to put yourself if the best financial position for pre-qualification and approval is an essen­tial first step. Let us help make the buying process easier, allow­ing you to enjoy the home buying experience.

About Chase

Chase Bank serves nearly half of U.S. households with a broad range of products. To learn more, visit the Banking Education Center. For questions or concerns, please contact Chase customer service or let us know at Chase complaints and feedback.

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What information do I need to provide?

PREQUALPREAPPROVAL
Income informationCopies of pay stubs that show your most recent 30 days of income
Credit checkCredit check
Basic information about bank accountsBank account numbers or two most recent bank statements
Down payment amount and desired mortgage amountDown payment amount and desired mortgage amount
No tax information requiredW-2 statements and signed, personal and business tax returns from the past two years

4. Employment Verification

Lenders want to make sure they lend only to borrowers with stable employment. A lender will not only want to see a buyer's pay stubs but also will likely call the employer to verify employment and salary. A lender may want to contact the previous employer if a buyer recently changed jobs.

Self-employed buyers will need to provide significant additional paperwork concerning their business and income.According to Fannie Mae,factors that go into approving a mortgage for a self-employed borrower include the stability of the borrower’s income, the location and nature of the borrower’s business, the demand for the product or service offered by the business, the financial strength of the business, and the ability of the business to continue generating and distributing sufficient income to enable the borrower to make the payments on the mortgage.

Typically, self-employed borrowers need to produce at least the two most recent years’ tax returns withall appropriate schedules.

Rescission

  1. In addition to requiring a waiting period after application, Regulation Z also requires a rescission period for certain loans. If you are refinancing your existing mortgage or taking equity out of your home, the bank must wait three business days after you sign documents in order to disburse the funds from your loan. Rescission is designed to give you time after your loan closes to reconsider and terminate the deal if you wish, but this timing does delay the availability of money from your loan for an additional three business days.

How Long It Could Take To Get a Loan

The entire process of getting a mortgage loan comprises several processes. These include getting pre-approved and getting the home appraised before you get the loan. Because of the many steps in this process, it is impossible to put a definite time frame. In the usual market, it takes an average of 30 days to get a mortgage.

If there are problems with your application, getting your loan approved could take much longer. It is advisable to start the mortgage application process as soon as possible to shorten this process. You don’t have to wait until you find the perfect property before you begin the mortgage process. You can save time by starting the process to get pre-approved first. 

Possible problems that might arise in the loan approval process include delayed appraisal, delayed tax transcript verification from the IRS, delayed verification of employment by employers, and provision of incomplete or incorrect information to the lender by the borrower. Although you may not have much control over most of these, you should ensure all documents provided to the lenders are submitted in a timely fashion and as detailed and accurate as possible. Doing this would speed up the approval process and shorten the time it takes to get a loan.

What is mortgage prequalification?

Prequalification is an early step in your homebuying journey. When you prequalify for a home loan, you’re getting an estimate of what you might be able to borrow, based on information you provide about your finances, as well as a credit check.

Prequalification is also an opportunity to learn about different mortgage options and work with your lender to identify the right fit for your needs and goals.

How long does mortgage underwriting take?

Each situation is different, but underwriting can take anywhere from a few days to several weeks. Missing signatures or documents, and issues with the appraisal or title insurance are some of the things that can hold up the process. Be very responsive to requests for information, and if you need more time to gather requested documents, continue to communicate status with your mortgage loan officer.

Why is it important to get pre-approved?

Getting pre-approved for a mortgage gives a person bargaining power since they have mortgage financing already lined up and can therefore make an offer to the seller of a home in which they are interested. Otherwise the prospective buyer would have to go out and apply for a mortgage before making an offer and potentially lose the opportunity to bid on a home.

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