This is such a common question, I decided to write this article to help any potential home buyers. It is very common to have a new consultation scheduled with a an upset borrower because their loan has not closed with their current lender. Sometimes it is the lenders fault, other times it is just the process and they are better served staying with their current lender. We always appreciate new business but we get more joy out of seeing happy clients by providing the RIGHT advice. The first thing we tell these mortgage refugees is, “Any change you make means you start over”. Sometimes it is tears and sometimes steam and sometimes….. The frustration is so great we work with that client to close their loan.
So How long does it take to close on a mortgage loan and what factors impact the closing timeline?
There are four key items to keep track of. If you have received our home loan guide, you can follow along and check off the boxes as you go.
When you purchase a home, an appraisal is needed to determine the value and condition of the property. The home is the security interest for the mortgage and needs to be valued high enough and in good enough condition for the bank to accept it. The appraisal (Not a home Inspection – make sure to read – the difference between an inspection and appraisal) can take up to 1.5 weeks to receive. Once received, the appraisal is submitted to the underwriter for review. The underwriter can take up to 3 days to review the appraisal and determine if it is acceptable or if revisions are needed. Keeping track of when the appraisal is ordered and received is important in understanding when you might close on your home purchase.
The title commitment is typically provided by the closing attorney or title company handling your real estate purchase transaction. The title commitment should take no more than 1 week to receive but in some areas the title company wants to see the mortgage commitment prior to ordering the title. If by some chance the loan isn’t approved, the title company can be stuck with the bill. How long the title commitment will take is greatly impacted by how long it takes to obtain a mortgage commitment/approval. The title company/attorney’s time needed can vary but should not take more than one week.
When the mortgage company representative requests documentation needed to submit the file to underwriting, get them to the mortgage company as soon as possible. If you haven’t provided the documentation, your loan is not being worked on and your closing will be delayed. Sometimes a client feels they are unable to get the document requested. Remember, millions of other homeowners provided the same document. Your situation is not unique. If you need assistance obtaining the documents, reach out to your mortgage professional and ask for guidance. Help your mortgage company help you. Get the documents to the bank as soon as possible.
Once all of the documentation has been provided, your loan will be submitted to an underwriter for review. Assuming a complete file has been provided, the underwriter will respond with an approval/commitment letter in roughly 4 days. The loan commitment/approval letter is then provided to the title company and the title commitment is ordered.
So What Does the Whole Process Look Like?
Once you sign your sales contract you will be contacted to meet with your mortgage representative to sign the official loan application. This typically takes 24-48 hours after the sales contract is executed. The sooner you sign the application and provide any requested documents, the faster you will receive your commitment letter.
Next, the appraisal is ordered. While the mortgage company is waiting for the appraisal, a mortgage commitment/approval is received. The loan commitment/approval will list any additional documents needed to receive a clear to close. Once the final documentation, appraisal, and title commitment are received, the file is resubmitted back to the the underwriter for issuance of a clear to close.
The whole process should take no more than 45 days if all parties involved in the transaction move in a timely manner. In some situations, loans can take longer. Not an ideal situation but this would be due to a delay in receiving title commitment, a property that needs repair prior to closing, or documents that a borrower is having difficulty providing.
The thing you absolutely should not do!!!
Change something….. Anything. It sounds silly but changes to your income, credit, or sales contract will greatly increase the time it takes to process your mortgage. If you change your credit profile or income, you may no longer meet the loan program requirements and could lead to a denial letter. If you change the sales contract… the appraisal, loan application, and title commitment all need to be updated. If you were on day 30…. You are now on day 1. Not a happy thought at all. If this angers you, just know that it also angers your mortgage company but as dedicated public servants, we will work with you until we close your loan. We pride ourselves on being problem solvers and overcoming every hurdle in the event of a change out of the client’s control.
Hopefully this article helps you avoid any delays on your home loan journey. If you have specific questions about your own situation, feel free to call us at 518-324-5544.
And remember – get the documents. 😉
Happy house hunting!