When it comes to mortgages, the acceptance process is not just a simple review of your current financial status. On the contrary, it implies a severe examination of your personal info, desired home, and credit history. So, how long does mortgage approval take?
Mortgage approval takes a month, on average. However, the exact length of the process is connected mainly to the information you provide. If they are incomplete or incorrect, it will delay the procedure. Unresolved disputes and delayed appraisals will also make your application pending and postpone the approval.
If you want to learn more about the mortgage approval phases, their length, and how to speed them up, find the answers below.
How Long Does Mortgage Approval Take? It Usually Takes Around Thirty Days, but the Exact Time Can Vary
Each mortgage application is different, with plenty of factors that can speed up or delay the acceptance. Do you have all the paperwork required? Are all your accounts clear, or are some of them being in dispute? Does your mortgage lender work with a lot of other parties? The length of the approval procedure will depend on these answers (and a few more).
Depending on your specific situation, it will take from a couple of weeks to a couple of months for your lender to consider your application. However, with good preparation, you can affect the speed and efficiency of your creditors. The fewer problems with your application they find, the sooner you’ll get approved for a mortgage.
Creditors must consider how much of a risk they would take if they decide to approve your mortgage, which demands an extensive background check.
At the same time, they must make sure that your new home isn’t selling above its true market value. That way, they won’t lose money if you don’t meet monthly installments and they decide to foreclose and sell your home.
Therefore, approval has become a complex procedure made from several different steps. Take a look at the table below and see how much each of them takes:
|Getting pre-approval letter||1-3 days||Providing details about income, assets, debt, credit history, and possible down payment (no official documentation needed) and getting pre-approved or denied.|
|Pre-approval period (underwriting procedure)||Several days-several months||Your eligibility for the mortgage you applied for will be checked by a creditor, based on your credit score and provided documentation.|
|Final approval||Around two and a half weeks||After you’re accepted, your creditor will conduct a property appraisal and give final acceptance.|
How Long Does It Take to Get a Pre-Approval Letter (and Why Do You Need One)?
After applying, you don’t have to wait for a whole month (or a few of them) to start looking for a new home. If the chosen creditor decides you can be a good candidate for a loan, you can get a pre-approval letter in just a couple of days after you apply for a mortgage.
This letter is no guarantee you’ll be approved at the end – for that, creditors must go through your financial situation in detail.
However, you’ll be informed about the amount the creditor is willing to lend you. With this letter, you can calculate your price range for the new home and show the seller that you’re a serious buyer.
Besides your personal and financial check-up, a creditor needs to have information about the property before starting the closing process. However, getting an appraisal and going through the title search won’t only benefit the lender but you too – it will keep you away from potential investment and title problems in the future.
Sadly, sometimes you can’t affect the appraisal delay. It may happen that there are some issues with the sale price; other times, some repairs will need to be done, or another appraisal will have to occur. In these cases, the acceptance procedure will last longer than average.
Underwriting is a procedure during which the underwriter verifies all the facts you provided with previously submitted paperwork and decides if you are eligible for a loan. If there isn’t enough information, your application may end up in a pending pile, which will delay the final acceptance. Here is how to avoid it.
The first and the most common reason why some of the processes last longer is the lack of the required paperwork. Your lender needs to have all details about your credit score, income, assets, and debts before making the decision.
So the processing can begin as soon as possible, ensure you contact the loan officer (or mortgage broker) and get ready to hand over all the documents your creditor needs. In most cases, you’ll be required to gather:
- Social Security number,
- Pay stubs,
- Tax returns, and statements,
- Proof of stable income,
- Bank statements,
- Proof of other assets,
- Details about recently received large deposits (creditors want to ensure that you’re not accepting other loans),
- Details about other debts (car, student loans, and the like).
Sometimes, your credit reports will not be fully correct and need to be changed. Otherwise, your credit score may suffer, which will lead to higher interest rates. Check these details and file a dispute (if needed) before you apply.
If you see some suspicious information on your credit reports that isn’t true (being late with payments, for instance), you should file a dispute so that the credit bureau can correct it on time. Keep in mind that the creditor won’t go through with the procedure until this problem is settled, so don’t let any of your accounts be in dispute before you decide to apply for a loan.
Although not all parts of this procedure depend solely on you, your actions (or lack of them) can significantly impact the amount of time needed for approval. If you want to close a mortgage quickly, meet all the requirements as soon as possible.
If not, your application will be suspended until the additional check, or further information is provided. Try to prevent this by following the tips mentioned above.