An article in Realtor.com is advising people looking to buy a home to begin their mortgage applications earlier rather than later. Apparently, many people underestimate exactly how long it takes to get mortgage approval.
The process of getting approved for a loan is quite complex nowadays with substantial documentation required alongside third-party verifications and there is the independent appraisal process. All these different requirements could lead to delays if any problems arise.
The article points out that there are several separate parts to mortgage applications which includes becoming pre-approved, getting a home appraisal and getting the actual loan. Generally, this only takes about 30 days but in the busier months it can take longer and it could be as long as 60 days depending on the lender. The procedure can become even more complicated if the lender has any queries due to financial issues being uncovered. Potential problems that can slow down the process include previous bad debts., foreclosures or a low credit score.
Instead of waiting until you have found the perfect home, the article advises beginning the pre-approval process as soon as you consider buying. Additionally, sellers may require that buyers are pre-approved before they will accept an offer. The first thing you will need to do is to pick a potential lender, as different lenders will offer different terms and rates. To become pre-approved, a lender will need to check your financial information which can take as little as a week to several months. Once approval is given, you will receive a letter showing the amount of money that has been pre-approved.
Pre-approval allows you to make an offer for a home, but once it is accepted then you will still need to apply for the actual mortgage and must complete the appraisal process. Your financial information will also need to be reviewed by an underwriter before you receive the final loan offer.
The article also highlights potential things that can slow down loan approval, such as verifications of employment or tax transcript verifications from the IRS. But apparently, the main reason for delays is due to the borrower failing to return documents quickly enough.