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How Long Does a Mortgage Application Take?

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Row houses (Photo: @christinesmitth via Twenty20)
Unless you’re purchasing a home in cash, there’s no way to get around obtaining a mortgage.
Mortgage brokers need a lot of personal info and documentation to determine whether you’re a good candidate and to calculate your loan estimate, which means the lending process can take a while.
On average, the process takes around 30 days, but there are potential factors that can make the process go faster or much, much slower.
Here are the elements of a mortgage loan application, how long they take, and tips for how to make the process run as efficiently as possible.

Documents to have ready

If you go to a mortgage lender without these documents on hand, it will most definitely slow the process down.
  • Social security card
  • Driver’s license
  • Last two pay stubs
  • Last two monthly bank statements
  • Last two years of federal tax returns
  • Last two years proof of employment in form of W-2 or 1099

Pre-qualification

Typically, the mortgage process begins with pre-qualification, which takes about one to three days to obtain. Often, a buyer will get pre-qualified before they start looking at homes.
Pre-qualification gives you an estimate of how much you can afford to spend on a home so you know what price range to consider. It also gives the seller assurance that you are serious when you make an offer.

Pre-approval Letter

A pre-approval letter from a lender means you have started the process for the mortgage application. Some sellers require you include the letter with an offer before they will accept it. This shows them there is a high probability you will qualify for your mortgage and that you are committed to the process. This is also where a lot of issues come up that may need to be resolved before the final mortgage is approved. Issues of concern include outstanding debt and a bad credit score.

Approval

The final step of a mortgage application takes the longest. This is when the lender initiates the underwriting process to ensure the transfer of property is legitimate. An appraisal is performed to make sure the home loan amount is correct for the value of the home.
A lender will not sign off on a mortgage agreement that is higher than the value of the house. A survey will also be conducted so that any disputes of property lines and boundaries can be resolved. If there are any other credit or debt concerns, the lender will work with you to resolve those as well.
Your employment will be verified again a day or two before closing and your credit report pulled to make sure you have not accrued more debt.
Approval could take anywhere from 3 days to a few weeks, depending on a limitless number of variables, like whether or not the appraiser has availability in their schedule or tracking down outstanding documents. To ensure the process goes as quickly as possible on your end, make sure you have accomplished everything under your control.

Closing

At closing, both the buyer and seller meet with the title company at separate times to sign the paperwork. All the mortgage documents will be present for everyone’s signatures and they will be notarized at the same time.
During the closing meeting, any additional down payment or fees from the buyer are required to be paid (typically, by a cashier’s check). You will also need to provide proof of home insurance if you haven’t done so already.
The title company will go over all the details and will answer any questions you may have. Once funds have been transferred, you will get the keys to your new home.
Sometimes closing takes a day or two, but often it happens within a few hours.
When considering how long a mortgage application takes, remember that there are many variables that may affect the process. It may seem like a long and tedious journey, but in the end, it’s designed to protect all parties. When all’s said and done, you’ll have a new home to enjoy!