This section will give you a good Idea of the mortgage process and
the time frame involved. The knowledge will help you feel more
comfortable with your lender as you go through the steps and it will also help you spot any red
flags along the way if they should appear.
The type of loan you are applying for will determine the length
of time required to approve and close your loan. Different loan types require
As an example, If you have good credit
and lots of equity in your home and you are applying for a 2nd mortgage
the lender may not require an appraisal. If you are getting a Line
of credit on your equity, that documentation can be completed with
some lenders in a matter of weeks. If you qualify for automated processing
(DU, or Loan Prospector) it is sometimes possible to close in less
than 60 days.
Your loan officer should walk you through the process
up front so you will know what to expect. Typically, most loans
take 6 to 10 weeks to close.
The following Video covers tips for the loan office that should help get your loan
approved with fewer delays.
Here is the mortgage loan process:
The mortgage application process is where you fill out the application,
sign various forms that authorize the lender to process your loan,
and deliver your documentation requirements. (Bank statements,
pay stubs, W2s, etc ) Obviously if you are doing this through
the mail it can take a week or more but if you go into the office
it usually only takes an hour or so. You should understand that
the next process cannot begin until these documents are completed
and or received.
When all of your documentation is received it then goes to a processor
who verifies and validates all of the information to be true and
correct. Verification requests may be sent to your employers, mortgage
holder/landlord and lending institutions. This is done by fax when
possible. It is usually during this time frame that the appraisal
and the title policy are ordered.
When all the information is collected
the processor then verifies that basic lender loan requirements
have been met. The file is then packaged in a manner the lender
specifies. The completed package (including the appraisal and title
report) is then sent to the underwriting department either in house
or to a lender-specified location.
The processing of your loan usually
takes about one to two weeks but it can often be delayed when third parties do
not respond to the validation requests or appraisals are delayed.
If your loan qualifies for DU (Desk top Underwriting) or Loan Prospector,
these are computer automated systems, the documentation requirements
are often cut in half and the process can be completed in three to
five days depending on the volume of loans the processor has.
The underwriter reviews your loan package to make sure it conforms
to all the guidelines required for that loan product. They also
review the appraisal and title report and may do additional validation
of employment, mortgage payments, and credit. And, anything else
they feel is necessary to document your loan. They have ultimate
power and decision authority over the approval of your loan. The
time required to do this is driven by the volume in the market.
If the market is flooded I have seen it take two weeks but under
normal conditions it only takes three to five days.
Automated Mortgage Underwriting
Most lenders today use Automated Underwriting (by computer). The advantage
is less documentation and it speeds up the process. The computer actually
makes the approval decision and the underwriter only reviews the supporting
documentation and the appraisal. However, if any documentation is
missing, inaccurate, or does not agree with the 1003 (application),
the loan will be kicked out of this system until documentation requirements
are met or the loan is turned down or resubmitted. This can cause
delays but they are usually resolved quickly. Automated Underwriting
can be completed in just a matter of hours. But, ..If the market is
flooded expect it to take longer.
Conditions To Close
When the underwriter is done reviewing your loan she will send
"conditions to close" to your loan officer. These are
normally just requirements for further documentation to support
your file. When these needs have been satisfied the underwriter
will give a final approval and "clear to close".
Clear To Close
When the loan officer gets the clear to close he then schedules
and coordinates with all the parties the time and location to
sign the final documents to close the loan. This normally only
takes an hour to schedule.
When everything is scheduled the lender then draws the document
package and sends it to the closing company. This can be done
by overnight delivery, fax, or electronically. It can take one
to two days. You meet, sign the papers, and pick up the keys.