The standard mortgage process from start to finish takes around 50 days right now. This is much longer than it took in previous years and is in large part due to the new laws that require specific waiting periods after the borrower receives mortgage disclosures. There are several ways you can help to make your process take less than 50 days, though.
Complete your Mortgage Application
The more information you provide the lender up front, the quicker they can get your loan into processing. It is not enough to fill out an application and expect a preapproval from the lender. They need concrete evidence of everything you state on your application including who your employer is; how much money you make; the type of assets you have; and the debts you carry. The more proof you provide the lender with up front, the quicker they can provide you with an approval and full underwriting.
When you complete the mortgage application, be ready to have very detailed information with you. This includes the name and address of your employers and any landlords you have to use for your housing history, if you rented. You should also have the name and address of all banks that hold your assets and explanations for any derogatory credit reporting on your credit report. The more information you have available right away, the quicker the process will go through.
Provide Paperwork Fast
Even if you receive a preapproval, chances are that the underwriter will ask for more information. The quicker you provide this information, the quicker the mortgage process can go for you. If you did not already provide your paystubs, W-2s, tax returns, and asset statements, this is the time to do it. If you work for yourself, you should start gathering your business license, a letter from your CPA verifying that you are self-employed, and any gift letters if you will use a down payment gift from a relative or employer.
If the underwriter asks you for explanations of any derogatory credit or large deposits, provide them in writing. Sure, you can tell the loan officer the story, but the underwriter cannot use the reasons for underwriting until they are in written format. The more details you can provide including dates, place, and names, the quicker the underwriter can determine their eligibility in the loan process.
Don’t Change Anything
Although it can be tempting to go out and purchase furniture for your new home or entertain a new job prospect that comes along, avoid doing this during the mortgage process. The more changes you make, the longer the process takes. Any little change alters your eligibility and requires the underwriter to go through the process all over again. Hold off on any large purchases and do not make any changes to your income/employment until your loan closes. Once you officially take possession of the home, you can make these changes. If you do them beforehand, the lender will have to recalculate your debt ratio and determine if your income is eligible for the program. Typically, a 2-year history of employment is necessary, so making changes at the last minute could be the demise of your mortgage.
Schedule the Appraisal Fast
During a refinance, you typically have to have an appraisal performed to ensure that the value of the home is high enough to provide you with a new mortgage. Because you are in control of when the appraiser comes out to your home, you control how long the process takes. The quicker you can get the appraiser into your home, the quicker he can provide the lender with the written report. Without that report, the loan processing cannot go on.
In the case of a purchase, you have less control over the timing of the appraisal, but you can work with the seller to encourage him to schedule it as quickly as possible. The quicker the appraiser does his job, the quicker the loan can close, which works to the benefit of the buyer and seller.
Ask Questions and Make Changes Fast
If you decide you want to change something on the loan’s terms, its costs, or any other aspect of the loan, make sure to do it quickly. By law, the lender must provide you with new documentation and give you 3 days to review it to ensure the changes meet your approval. If you wait to make the changes or you make them several times throughout the process, you continually add time to your mortgage closing.
The mortgage process is fairly straightforward and typically completes within 2 months, but there are exceptions to the rule. For the most part, you can help speed things along by providing the underwriter with everything he requests in a timely manner.
Justin McHood is America's Mortgage Commentator and has been providing expert mortgage analysis for over 10 years.