How Long Does It Take to Get a Mortgage?
Running out of patience after applying for a mortgage? Mortgages, like every other loan, take time.
But the standard time is what every mortgage applicant wants to know.
Discover the average duration for closing a mortgage so you no longer wonder how long it takes to get a mortgage.
Mortgages Back in the Mid-2000s
During the mid-2000s, mortgages were quite swift. The same applies to the late 2000s.
Back then, the underwriting rules were less rigid. Moreover, credit agencies had more staff and the credit market was still competitive.
It was so quick back then that you can get an approved loan within the day. You heard that right— the same day.
If you sent your loan application to your creditor in the morning, there was a high likelihood that you would receive a conditional approval message from an underwriter the same evening.
Of course, this was back then. The present situation is not quite the same.
The Present Situation
Business reduced at a shocking rate after the mortgage havoc.
Long gone are the swift and flexible days of mortgage approvals.
Today, credit agencies are reluctant to approve loans without conducting in-depth research on the borrower.
The chances of getting an approved loan the same day you applied are very low.
Average Duration to Close a Mortgage
The credit industry has since recovered from the crisis. However, they retained the longer duration for processing loans.
Due to numerous rules and regulations, the average time to close a mortgage is now between 10 to 45 days. Creditors need ample time to review your application.
And rather than getting the approval mail in a day or a week, loans are carefully reviewed before sending it to the underwriter’s office.
The consequence of these procedures and protocols is that it might take a couple of weeks to process a loan application before approval.
Even in 2006, you might have gotten your approval letter in a day. However, you’d need to meet 20 parameters before you could close a mortgage.
While some loans can get approval quicker than others, allow yourself around a month or two to process your application.
It’s advisable to give yourself a buffer to avoid an outdated lock and/or per diem interest.
Mortgage Time Frame
Given the similarity in the timelines of both programs, there seems to be no difference between the two.
But, the time range is just an average.
There are home loans that would be approved and closed quicker while others might move at the snail’s speed.
Like everything in the credit market, it’s hard to commonize. Each mortgage (and the respective loan applicant) is quite different.
The status quo is that the more juice you are as a loan applicant, the swifter the process, all things being equal.
We also have to take into account that creditors and agencies function differently.
Some creditors take three months to close a home loan because of their strict loan approval system.
Nevertheless, other creditors would go the extra mile to close your mortgage within a week. It all depends.
Why the Long Wait?
The loaning process is quite tasking. It demands various personnel to approve your loan document before closing the mortgage.
Some of the people involved in the loaning process are a loan officer, an underwriter, a processor, an insurance company, a title company, escrow company, a funder, an appraiser, and a closer.
If you’ve ever supervised a team project, you would know it’s hard to get a group of people to contribute to a common goal.
Even in the most favorable case where you’re a juicy applicant with a W-2 occupation, singe bank account, good credit score, and no recent activity, closing a loan could still take a couple of weeks.
One of the many reasons for the delay is a home appraisal, which is necessary to know the value of the assets in question.
Creditors can’t approve a loan if they have no idea what your property is worth, so they need an appraisal. The process could take 7-10 days or more, depending on the appraiser.
This the reason creditors book the appraisers beforehand, so they could quicken the approval process.
The other way around this delay is taking care of the loan documents by getting loan officers and loan underwriters while other processes are ongoing.
This was may involve gathering loan particulars, mailing over the letter of explanation aka LOE, and so on. The process gets more complicated as we go along.
Another reason why processes may take longer is because of an uncooperative applicant.
What is the Average Duration for Closing a House?
As regards to a home purchase, the date of closing a mortgage is controlled by the close of escrow date.
If the agreement states 30 days, prepare to close the mortgage in 30 days. If you and the seller agreed on 45 days, you’d have more time to close the mortgage.
Peradventure takes longer to get the loan. The best is to prepare to pay extra fees as per diem fees, lock extensions, and so on.
That is the reason the real estate agent must reach a consensus on a feasible escrow based on the lending conditions.
It’s painful to get stuck due to additional charges.
Also, this is evidence that pre-approval is key to a hitch-free loan process and to get yourself ready before you start searching for a house.