How Long Does the Underwriting Process Take?
Your client has finally decided on a house they would like to purchase and put down the down payment. You have a mortgage lender in mind, and the client asks, “How long does it take to get the loan processed? When will I know if the loan is approved and, more importantly, when will I be able to move into my house?” These are all valid questions. Can you give them a better answer than the usual “It depends.”?
It does depend. It depends on the documents provided by the client, it depends on the client’s situation, and it depends on the client’s credit score. It also depends on the lender. Banks take longer, while independent mortgage brokers like Bluepoint Mortgage have a cohesive staff that, in working so closely together, can result in more efficient operations and cut down the turnaround time. There are so many variables that it is hard to give even a ballpark answer. The length of time it takes for the loan to be funded also depends on the underwriter.
What Does the Underwriter Do?
The underwriter is the detective of the mortgage company. Once the down payment is made, the underwriter is the one who does all the leg work, assessing your client’s eligibility by checking the client’s credit score and tax returns, tracking down facts enough to make his decision whether or not to fund their purchase. As the process can happen in as little as two to three days, the process usually takes more than a week but could take up to several weeks. The time between making the down payment and getting the keys can sometimes be critical because the buyers may need to work out some important details with their present place of residence, so they want to know the process and how many days they need to wait.
Meeting Loan Requirements
Underwriters need to ensure that your client meets all the requirements for the loan they are applying for in terms of:
- Income – bank statements, tax returns, W-2’s, employment
- Debt – debt-to-income ratio (DTI)
- Credit – A credit score of at least 620 and above
- Collateral – other assets, if any
In addition to the paperwork, they need to meet requirements for the guidelines of the specific loan: VA, FHA, Non-QM, etc. The banks’ guidelines are stringent, so the underwriter usually asks for more documents than may be necessary to cover themselves and their employer.
Steps for Home Loan Approval
The process of approving a home loan is long and detailed. Everything must be perfectly executed for the underwriters to do their job. Each step brings you closer to closing the loan. The underwriter needs to follow all the steps and will let you know what exactly your client needs to do each step of the way to make the process go more smoothly.
- Filling out an application – This can be done online or in the lender’s office. Your client may be asked for additional documents to begin the process.
- Receiving a Loan Estimate – You will be given a loan estimate for your client once their application is processed. It will include a ballpark amount of what their monthly mortgage payment will be, the interest rate they will pay, and the interest percentage for the life of the loan. This is only an estimate; the real amount will be given at closing.
- Loan Processing – This is where the underwriter steps in. Your client will need to turn in all of the requested paperwork and then some. The underwriter will be checking their personal and financial details for their ability and willingness to pay back the loan.
- Waiting for Approval – The loan application can be denied, suspended, or approved with contingencies. If the application is denied, it’s time to look for another lender. Be aware that it is possible for the loan to be pre-approved by the lender then denied by the underwriter. If it is suspended, this means they need more information to make a determination. If the loan is approved, it will probably have contingencies.
- Clearing Contingencies – Contingencies, or conditions, are usually just a few more documents or an appraisal on the home that the underwriter needs for clarification to make sure the closed loan is as risk-free as possible to cover himself and his employer.
- Closing – When they ask for more documents, it would be in your client’s best interest to get them together as quickly as possible so you can hear “clear to close”! Once the loan is approved with no contingencies, it’s time to sign the papers and pick up the keys!
Make the Loan Process Less Complicated with Bluepoint Mortgage
As you can see, the process is long and complicated. The entire process can take just a few days if everything is in order, and your client has stellar credit, or it could take several weeks if there are delays on either side, like inclement weather or a delay in obtaining documents. The process usually takes a little over a week, and most loans are eventually approved.
To make the process flow as smoothly as possible and get the loan approved in the shortest amount of time, contact Bluepoint Mortgage, we will help you every step of the way. With our helpful staff and quick turnaround time, you will get to deliver the fantastic news to your client that the loan is “clear to close” and it’s time to sign on the dotted line to make them officially homeowners!