{"id":48302,"date":"2023-01-24T04:59:00","date_gmt":"2023-01-24T04:59:00","guid":{"rendered":"https:\/\/businessyield.com\/?p=48302"},"modified":"2023-02-10T13:47:11","modified_gmt":"2023-02-10T13:47:11","slug":"how-long-does-underwriting-take","status":"publish","type":"post","link":"https:\/\/businessyield.com\/bs-personal-finance\/how-long-does-underwriting-take\/","title":{"rendered":"How Long Does Underwriting Take?","gt_translate_keys":[{"key":"rendered","format":"text"}]},"content":{"rendered":"\n
When you receive a mortgage, whether you’re buying a new house or refinancing an existing one, your loan will go through a process known as “underwriting.”
When you’re anxious to close on your loan, each new step in the process might be stressful. What if this produces a stumbling block that delays or stops my closing? This is especially true during underwriting when an underwriter will go over your financial history with a fine-toothed comb.
Understanding how underwriting works and the typical timing of the process will help alleviate your concerns and equip you to deal with difficulties that may occur while your loan is being underwritten.<\/p>\n\n\n\n
So, how long does it take to acquire a mortgage underwriting? Let us take a look.<\/p>\n\n\n\n
According to Ellie Mae, the average time for a mortgage underwriting is 52 days, from the moment the lender receives your application to the time they disburse the loan.<\/p>\n\n\n\n
Conventional loans took the shortest time to close, at 51 days, followed by FHA loans at 55 days and VA loans at 57 days.<\/p>\n\n\n\n
This is the length of the long process, but what does it teach us about underwriting?<\/p>\n\n\n\n
The majority of the closing process consists of the many procedures your lender will take to ensure that you are creditworthy and that they are not incurring an unnecessary amount of risk with your loan. Much of this work is done during the underwriting process. If the underwriter runs into problems, your closing may be delayed.<\/p>\n\n\n\n
How long does this procedure normally take? Underwriting might take anything from a few days to a few weeks before you are cleared to close.<\/p>\n\n\n\n
How long it will take for you depends on a variety of factors, including the number of applications your lender is presently processing, the lender’s underwriting standards and procedures, and the intricacy of your individual financial condition. Those with more intricate financial histories, such as self-employed borrowers, may need to take a bit longer than those with a more straightforward application.<\/p>\n\n\n\n
Having good or exceptional credit can assist assure a smooth transaction. To expedite initial approval decisions, several lenders use computerized underwriting. Automated underwriting approves borrowers who meet or exceed the lender’s required credit profile in real-time. Also, be sure that the information you offer on the application is both accurate and up to date – any differences may result in your application being identified and delayed.<\/p>\n\n\n\n
To avoid delays, make no big changes to your credit after you begin the underwriting process.<\/p>\n\n\n\n
Even if the lender uses an automated system, some components of the underwriting process, such as financial document verification, must be done by an underwriter. You can expedite this step by having these documents ready to scan (usually the lender will list these documents on the application).<\/p>\n\n\n\n
When you submit your application online, you should be able to send these papers immediately through the site.<\/p>\n\n\n\n
Another approach to expedite the process is to answer quickly to any underwriter’s demands. If they require additional information, they will usually notify your mortgage loan officer, but some will contact you through the loan portal, so you should log in on a frequent basis to check for requests.<\/p>\n\n\n\n
You should also avoid creating new credit accounts throughout the underwriting process and before canceling existing ones (this includes financing new furniture for your home). Your credit report will be pulled again immediately before closing to ensure there are no big changes. Any new changes may cause your final approval to be delayed or jeopardized.<\/p>\n\n\n\n
Let’s go over the full mortgage process, from application to closing, and see how long each stage usually takes and how underwriting factors into it.<\/p>\n\n\n\n
When you first apply for a mortgage, you’ll usually be asked to supply a slew of details regarding your current financial condition. You may have to give evidence demonstrating your income, savings, debts, and any other financial information. You’ll also grant the lender access to your credit history and score.<\/p>\n\n\n\n
The lender will review all of your information and assess whether you meet their loan qualifications based on the information you submitted. This should take no more than a week to finish.<\/p>\n\n\n\n
At this point, you may receive a preapproval letter from the lender outlining the amount of money they are willing to grant you depending on your financial profile. This will assist you in understanding your budget range when looking for a home. Going through the preapproval process before you start looking can help you make offers with confidence and will allow you to smooth out any bugs in your application before going through the underwriting process, which will save you time once you’ve located your future home.<\/p>\n\n\n\n
When you’ve located the perfect home, you’ll make an offer and haggle with the seller. If everything goes as planned, you’ll both sign the purchase agreement and be under contract to buy that house.<\/p>\n\n\n\n
Following that, you’ll negotiate with your lender to obtain final approval and be cleared for closing.<\/p>\n\n\n\n
Whether you’re buying or refinancing, you’ll almost certainly require an appraisal.<\/p>\n\n\n\n
The appraisal will be ordered by your lender. A licensed, third-party appraiser will provide an appraisal report according to a physical assessment of the subject property’s interior and exterior, as well as the sales prices of recently sold properties that are similar to the property being appraised.<\/p>\n\n\n\n
The appraiser’s opinion of the home’s fair market value will be part of this report. This entire procedure usually takes a week or less.<\/p>\n\n\n\n
The valuation is critical to the underwriting process. Knowing the true value of the home in comparison to the sale price assists the underwriter in calculating the loan-to-value ratio (LTV) and ensuring that the borrower has enough money in savings to afford an adequate down payment.<\/p>\n\n\n\n
An underwriter will review every area of your file to ensure that you qualify for the loan and that the lender is not taking on too much risk by lending to you.<\/p>\n\n\n\n
Underwriters will attempt to answer these three fundamental questions.<\/p>\n\n\n\n
Have you ever defaulted on a mortgage loan? Do you have a track record of paying your bills on time? What is your credit rating? They’ll be seeking answers to inquiries like these.<\/p>\n\n\n\n
Underwriters want to know that your debt-to-income (DTI) ratio is not so high that you will struggle to make your monthly payments. They will also ensure that you have some extra money available, known as reserves, that you can use to meet your mortgage payments if you lose your source of income unexpectedly.<\/p>\n\n\n\n
Lenders are reluctant to lend more than the home is worth because the property serves as collateral if you default on the loan. They will consider the loan-to-value (LTV), the amount of equity the borrower has in the home, and the size of the down payment.<\/p>\n\n\n\n
If everything checks out, your lender may accept your loan or provide you with conditional approval. You’ll be able to close as long as you meet the terms of the conditional approval. This could suggest that your loan otherwise appears to be in good standing, but you need to supply extra documents.<\/p>\n\n\n\n
The length of this stage is determined by how long it takes you to provide the required information to your lender and how long it takes them to process it.<\/p>\n\n\n\n
You will be cleared to close once the underwriter has verified that your loan is suitable for approval. You will now receive a Closing Disclosure. This document covers the final specifics of your loan, such as the loan amount, interest rate, projected monthly payment, closing expenses, and total cash required at closing.<\/p>\n\n\n\n
Your Closing Disclosure will arrive at least three days before your closing date. Assuming everything is in order, the only thing standing between you and closing day is the last walkthrough.<\/p>\n\n\n\n
It would be ideal if your loan lender could just mark you as “pre-approved,” but that is not the case. The first step is to make a down payment. Once you’ve paid, it’s time to assemble and submit your documentation.<\/p>\n\n\n\n
Before providing a pre-qualification, your mortgage officer or loan officer will normally evaluate the buyers’ tax papers, pay stubs, bankruptcies, debt-to-income (DTI) ratio, liens on any property you own, and other fundamental paperwork.<\/p>\n\n\n\n
To guarantee your creditworthiness, underwriting for a house loan goes over every form, deposit, and credit report with a fine-toothed comb. An underwriter’s role is to validate and verify your DTI and credit worthiness to ensure you fulfill the lender’s criteria.<\/p>\n\n\n\n
The majority of the mortgage loan procedure is open to the public, while the underwriting phase is conducted behind closed doors. Some borrowers have perfect credit, while others require a deeper investigation to learn more about your credit history. Even after you submit your papers, someone at the bank or lender may contact you and seek additional documents or explanations.<\/p>\n\n\n\n