Homebuyers

The Race to Closing: How Long Does It Take to Get a Mortgage?

Buying a home can feel like a competitive sport. First, you need to find the right property, then you must jockey for favor from the seller to beat out the other buyers. And when you’ve almost clinched it, you often still need to secure your mortgage.

Financing is often one of the biggest homebuying steps. And sellers often consider how quickly you’re able to lock in a loan when they’re deciding between offers. So, how long does a mortgage application and approval take?

“Traditionally, you can expect a 30- to 45-day close,” said New American Funding loan consultant Eva Melgarejo. She is based in Long Beach, Calif. “Some direct lenders or specialty brokers can get you to close in as little as 14 days.”

Homebuyers who are already preapproved for a mortgage may have an edge as much of their information has already been verified.

Let’s take a look at what goes into a mortgage application and what speeds up, and slows down, the process.

Which mortgage requirements take the most time?

The mortgage approval process requires a comprehensive review of your financial situation.

Lenders generally need several key documents: the last two years of W-2 forms, your most recent pay stubs, and your most recent bank statements. This documentation provides a good picture of your earnings and savings.

You will also typically need a home appraisal.

Once you have an offer accepted, generally, your lender will schedule a property appraisal. Appraisals verify the property’s current value to ensure you’re not overpaying for the home. They can take as little as a few days, from scheduling to receiving the final report, to several weeks.

Appraisals for Federal Housing Administration (FHA) and U.S. Department of Veterans Affairs (VA) loans may take even longer due to different requirements.

What can cause delays with your mortgage?

Homebuyers with income that varies month-to-month or year-to-year or who have changed jobs within the last two years should expect that it may take longer for your mortgage to close.

The best way to speed up your application is to disclose all your income sources, including child support, overtime, and any special government subsidies like Social Security income, immediately, said Melgarejo.

“If we don’t have a complete financial file, if the client has delayed signing things, or if the appraisal is not ordered in time, those are the things that delay a closing,” she said.

Job changes can be a bigger delay than many buyers realize. Even if your income has stayed the same from year to year, a change in how you are paid can affect the approved amount of your loan.

Say you made $90,000 in the last two years. But you transitioned from earning all your income as a traditional employee who receives a W-2 tax form to earning half of that income as commission. Lenders may only include the guaranteed salary in your financial statements, depending on your situation, loan, and other specifics.

Do certain mortgages take longer to close?

There are many different types of home loans available. Each has very similar requirements, although some loans will need additional information or inspections.

For example, government loans, such as VA and FHA loans, may have a longer appraisal process.

Should I get pre-approved for a mortgage?

Pre-approval letters, particularly when your file has been reviewed by an underwriter before you find a property, may speed up your closing timeline.

This process, sometimes called being “fully underwritten,” means the lender has already verified your income and approved your financial profile.

While you will still typically need to get an appraisal, the loan application is generally smoother provided your financial picture hasn’t changed.

How long does it take to refinance your mortgage?

When interest rates drop, homeowners with high interest rates may consider refinancing their mortgages to save money. Generally, the process takes 30 to 45 days.

Since borrowers are not competing with other buyers for the property, these loans may take longer to close than purchase loans.

Interest rate locks allow borrowers and lenders to take more time to work through the necessary steps without worrying that mortgage rates will rise before closing.