How long does it take to get a mortgage?
Getting a mortgage requires the homebuyer/borrower to complete an application and submit documentation (including employment, income, and debt records) to a lender, who then evaluates the borrower’s creditworthiness to determine if the individual or individuals qualify for the loan.
From application to approval and closing, getting a mortgage can take anywhere from 30 days to 60 days. However, some home purchases can take longer, depending on factors unique to the purchase transaction and the home loan processing time.
There are steps homebuyers can take to speed up the home loan processing time, such as gathering your documents ahead of time.
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Read on to learn more about how long it takes to get a mortgage approved.
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Mortgage timeline and process
All lenders follow a similar application, processing, underwriting, and approval process. All lenders will check the borrower’s credit score and credit history, look at employment, income, debt, assets, and other details in the borrower’s financial background to ensure that whoever is applying for the mortgage will be able to repay this debt.
While there are industry average home loan approval times, how long it takes to get approved for a home loan depends on numerous factors unique to each homebuyer and each unique home sale.
This is the average home loan approval process
:
1. Find a Lender. Different mortgage lenders may offer similar types of mortgage loans and yet different mortgage rates and terms. CU SoCal can help you learn
how to choose a mortgage lender.
2. Get preapproved. Start by talking to a mortgage loan professional about your homeownership goals. To get pre-approved, you will need to provide the documents mentioned above, and the mortgage professional will ask your permission to check your credit score. Once approved, you will receive a “preapproval letter.”
3. Find a real estate agent. While some homebuyers will go it alone to find a home or contact several different agents to show them properties, most prospective homebuyers use one agent to help them look at homes, make an offer, negotiate the sale price, and assist with various aspects of the homebuying process. Not all agents are licensed by the National Association of Realtors. A licensed Realtor® is typically your best choice.
4. Find a property. You should know your price range (based on your mortgage preapproval letter), and know the home/property features that you want. It is equally important to choose to look in several neighborhoods. Share this information with your realtor so she or he can find homes to show you that satisfy your search criteria.
5. Make an offer. Once you find the house you want, your realtor will help you make an offer. Most people make an offer below list price and then negotiate with the seller. Your realtor will do the negotiating on your behalf. If you and a seller cannot agree on a price, then you’ll need to keep looking for another home.
6. Get an appraisal. Once your offer in a home has been accepted, you’ll need to order an appraisal. Most mortgage loans require that the borrower get an appraisal on the market value of the home. The lender uses the appraisal to determine whether the price being paid is worth it, so in the event the borrower cannot repay the mortgage loan, the lender will be able to recoup their loss.
7. Get a home inspection. Next, it’s wise to hire a licensed home inspector or inspection company to do an inspection of the home. They will look at the home from basement to roof and provide you with a report of any defects they find. This could include issues with the plumbing, electrical and HVAC systems, as well as structural defects. With the inspection report in-hand you may ask for some repairs to be made as a condition of the sale or you may decide the house needs too much work and isn’t right for you.
8. Title search. The title company will do a title search with the town, county, and other agencies to ensure there aren’t any tax liens, open permits, or property line disputes that could affect the transfer of property ownership. The goal is to get a “clear title.”
9. Underwriting. This is a step in the lender’s internal process for reviewing the documents you provided and making sure you can meet the specific requirements for the type of loan you’ve applied for. The home loan processing time can depend on the lender’s internal processes, however; you can speed things along by having your documents ready at the start.
10. Closing. After your application is approved, the loan is clear to close. Many closings are done virtually with funds wired from the buyer to the seller. A title company, chosen by the seller, will typically manage the closing. You may also choose to use an attorney for the closing, who can help you navigate the transaction.
How to speed up the mortgage process
Here are some practices to implement to make it quicker and easier to get a mortgage:
- Check your credit score. According to the credit bureau Experian, a credit score of 620 or higher is typically needed for a conventional mortgage refinance. Certain government mortgage programs require a credit score of 580, however, or have no minimum at all. Get your free Annual Credit Report.
- Save for down payment and closing costs. The more money you have for a down payment, the lower the loan amount you’ll need. All mortgage loans will have closing costs that are fees paid to the lender, the title company, even a real estate attorney if you are using one. Some closing costs can be included in the loan amount, but you’ll save money in the long run if you can write a check for the closing costs. Start saving by putting more of your monthly earnings into a savings account. See how much house you can afford.
- Avoid raising your DTI. Most lenders look for a DTI ratio between 35% and 50%. To calculate your DTI, add all your monthly expenses (debt payments) and divide that number by your gross monthly income (before taxes). If you’re planning on purchasing a home using a mortgage, then it’s smart to avoid increasing your DTI. This means you should not make any large purchases requiring new debt, such as a car loan.
- Gather necessary documents. Lenders will want to see pay stubs, W-2s, 1099s (if you’re self-employed), bank statements, and other documents showing your income, assets, and debts. Save time by gathering these documents before you apply for a mortgage.
- Research where you want to live. When it comes to buying a home, everyone has heard the saying, location, location! But sometimes the location you want is not affordable or you can’t find a home due to low inventory. Take the time to identify several towns or neighborhoods that could meet your needs.
Potential issues
Here are some issues that can slow down the average home loan approval or home loan processing time:
- Delays in appraisals. If a house doesn’t appraise for a sufficient market value (as compared to the purchase price), the mortgage may not be approved.
- Tax transcript verifications. Your lender will likely require that you show tax returns as part of the mortgage approval process. If you don’t have these documents, you may have to request tax transcripts from the IRS.
- Verification of employment. If your employment has not been steady, the lender can decline the loan. All lenders want to be certain that the mortgage loan will be repaid. A co-borrower may be required on the application so the lender has the security of two incomes and assets contributing to re-paying the loan.
- Late documents. Although most documents can be sent to the lender and real estate attorneys by email, which speeds up the process, it may take time to get documents in the first place.
Why savvy consumers choose CU SoCal
For over 60 years, CU SoCal has been providing financial services, including mortgages, Home Equity Loans, HELOCs, car loans, personal loans, credit cards, and other banking products, to those who live, work, worship, or attend school in Orange County, Los Angeles County, Riverside County, and San Bernardino County.
Please give us a call today at 866.287.6225 today to schedule a no-obligation loan consultation with a CU SoCal Mortgage Loan Originator.
Get Started on Your Mortage Today!