After your mortgage loan is approved, it can take 4 – 8 weeks for closing. What makes mortgage approval process so long?
There are a variety of hurdles. Some lenders aren’t efficient about closings or neglect to keep you informed about what they need. While you can’t affect your lender’s efficiency, you can play a pivotal role in moving the mortgage approval process along by understanding what’s involved and knowing what’s required from you as a borrower.
You can also circumvent problems by choosing the right lender. If you are considering a retail bank, make sure that they have an efficient mortgage approval process in place to close on your loan as quickly as possible.
Factors Affecting Mortgage Approval Process
Paperwork and Documentation
The volume of paperwork is the primary hurdle. While it may seem overwhelming, keeping an organized list will help you keep track of what you need. Even better, begin collecting these materials during your home search to stay one step ahead. Help your lender to efficiently start the mortgage approval process by promptly gathering and sending the following:
- W2s
- Bank statements
- Tax returns
- Brokerage statements
- Pay stubs
- Purchase agreement (if you’re buying a home)
- Current mortgage statement (if you’re refinancing a home)
Though the above list highlights commonly requested information, specific documents may vary by lender. You’ll also want to confirm what date range is needed for things like bank statements and pay stubs. Be sure to respond promptly when your lender requests additional information, so as not to slow down the mortgage approval process.
One difficulty with retail banks is that they often aren’t prepared to process your information. A lender can be slowed by a backlog of mortgages, by loan officers that aren’t licensed, or by sending information to underwriters outside the area. When choosing a lender, ask about some of these circumstances to make sure your loan is considered a priority.
Third-Party Verification
Lenders depend on partnerships with other companies to complete certain aspects of the mortgage approval process. If one of these third-party firms, such as an escrow or title company, is delayed, it can slow down your closing.
Another important step in the loan application process is the appraisal. The home you’re buying or refinancing must be appraised to determine its value; the lender won’t approve a loan for less than the home’s assessed value. If the appraiser is busy or the current owner can’t give them immediate access to the property, the mortgage approval process may come to a temporary halt.
Your current employment must also be verified, along with your spouse’s or anyone else on the loan with you. Depending on your lender, they may simply call your employer to confirm you are still working there, or they may request a form be filled out and signed. It’s always courteous to give your boss or HR department a heads up that your lender will be calling, and it may also help expedite the mortgage approval process to give them a gentle reminder to send back any required information.
Closing
Closing can be a complicated process, but it doesn’t have to be. Keep in close contact with your lender to ensure there are no final hiccups and make sure you do your part by promptly sending in any additional information they request and keeping up with home inspection results and any necessary repairs to be done.
Stay on top of closing fees and make sure that you receive all necessary documents and disclosures. Delays in closing are best prevented through open communication and your own knowledge. Your lender is crucial in providing both, so don’t be afraid to ask questions. Remember, you may be borrowing money, but you are the client!
Lender and borrower preparedness
While you cannot control every step, you can set the tone for the mortgage process by promptly providing the information the lender needs to get started and requesting regular updates on the process. By choosing the right lender and being an informed, proactive borrower, your loan approval process can be a truly positive experience on the road to home ownership or refinancing.
Carlyle Financial is a mortgage bank. Unlike retail banks, we process and approve loans under a single roof, providing our clients with efficient service. To prevent unnecessary delays, we offer a checklist of needed documents for purchase and refinance. The mortgage bankers at Carlyle Financial can guide you through the mortgage process. Call us at 800-975-2265 or click here to discuss your mortgage needs.