How long should it take -- why so long?
How Long Should It Take To Get A Mortgage?
Thirty days, more or less. Occasionally shorter, sometimes much longer.
Why Does A Mortgage Take So Long?
Funding a mortgage takes a long time because so many different parties need to coordinate with one another: you, the funding institution, potentially a mortgage broker, the title company, the escrow company, a seller if you are buying a home, and so on.
Another factor determining the speed of a loan is your personal financial situation. If you have poor credit, the lender will require more documentation and will more carefully check your information.
The type of loan you choose also affects turnaround time. For example, you can apply for either a Full Documentation or a Stated Income loan. The Full Documenation loan requires documentation of all of your income and assets. This requires more work and time, but provides you with a better interest rate. With a Stated Income loan, the lender simply goes by what you declare your income to be, which is quicker but usually costlier since the lender is taking more risk on you.
What Can I Do To Speed Up The Mortgage Process?
If you are shopping for a home, get pre-approval from a mortgage lender because that will start the process and speed up the time-line once you have found the home you want to buy.
The best thing you can do to speed up your mortgage funding is to remember the Boy Scout motto and "be prepared." There is a tremendous amount of personal financial information that is needed during the mortgage process and you must make sure you have detailed and accurate information. Start getting gathering your documentation as soon as possible, and it will make the process that much smoother and quicker.
Typically in a full documentation loan you will be required to provide proof of:
- Work history
- Job verification
The documentation the lender will typically want to see includes:
- Two years of W2s
- One month of pay stubs
- Three months of banks statements
Once you filled out the application, the documentation requirements are not over. Other information the lender may ask you about while they evaluate your application include:
- The final purchase contract for the house (if applicable).
- If you're self-employed, the mortgage company may require your personal and business tax returns for the previous two years and your company's year-to-date Profit and Loss statement.
- Divorce settlement papers, if applicable
- Updated account statements for listed assets in the application that may have changed in value.
- Information about debts or credit report items that may have been delinquent or not accurate.
- Evidence of your mortgage or rental payments, such as canceled checks.
- An irrevocable gift letter if you are receiving a monetary gift from a relative.
Additionally, there are several types of problems that may occur during the process that require additional documentation or delay. These include:
- Switching jobs
- Credit changes such as you make a late payment and the lender finds out
- Your Rate Lock may expire
- Buyers and sellers modify their contracts so the language is unclear to the lender
- Signer issues: if a property has multiple sellers it may be difficult to get all the signatures needed
- Appraisal problems: the appraisal of the property value is not high enough to support the sales prices and requested loan
- Title issues: the title search reveals "clouds" on the Title
In addition, always make sure you are available to answer questions and address problems as soon as they arise.