What to know about the underwriting process timeline
The mortgage underwriting is not automated. A checklist of the documentation you must submit will be provided to you. Its timely delivery may have an impact on the schedule. This article contains all the information you need to understand the underwriting process timeline, the reasons it takes so long, and some recommendations for accelerating it.
What are the steps in the underwriting process?
Although it would be convenient if your loan lender could simply mark you as “pre-approved,” that isn’t how things operate. Paying the down payment is the first step. After completing the payment, it’s time to compile and send in your supporting paperwork.
Before providing buyers with a pre-qualification, your mortgage officer or loan officer usually reviews the buyers’ tax returns, pay stubs, bankruptcies, debt-to-income (DTI) ratio, liens on any properties you own, and other basic documents.
To verify your creditworthiness, every form, deposit, and credit report is examined closely during the home loan underwriting process. Making sure you meet the lender’s requirements, including verifying and evaluating your DTI and credit worthiness, is the responsibility of an underwriter.
Although the underwriting process happens behind closed doors, the majority of the mortgage loan application process is fairly transparent. While some borrowers have perfect credit records, others need to dig a little deeper to learn more about your credit history. It’s possible that a bank employee or a lender will ask you for more paperwork or clarifications even after you’ve submitted your submission.
What are the documents an underwriter looks at?
Depending on the kind of loan you are receiving from your lender or underwriter, different documents will be required for your application (an FHA loan, for example, often requires more paperwork) As part of the mortgage underwriting process, be prepared to provide your tax returns, credit score, W-2s, bank statements, and pay stubs.
Additionally, you should prepare to submit more paperwork each time a lender or underwriter asks a question. For example, there may be a recent $2,000 deposit on your bank statement. Although you are aware that your grandmother gave you the money as a birthday present, the underwriter will still like to know where the money came from. It’s likely that you’ll need to send your lender a letter of explanation explaining that it was a gift.
Underwriting can be difficult because you may think that you know the answers to the questions. Please don’t take it personally; many lenders and underwriters also find the mortgage loan process to be frustrating, but they must do this as part of their employment.
According to Emily Rees, a former underwriter, “the banks also give underwriters almost no room to make exceptions using their judgment.” Underwriters usually overask for documentation to cover their asses rather than being confident in their decision and moving on because they are afraid of having a loan audited and receiving a low score. ”.
How long does the underwriting process take and how to speed up underwriting?
Making sure your paperwork is complete for the lender or underwriter is the best way to expedite the loan underwriting process, if you’re wondering how long it takes and if you can help move it along. If all the paperwork is in order, your loan could be approved in as little as two to three days—or, with luck, in just one day.
But be prepared to wait at least a week for the underwriter to issue a “conditional approval” if additional documentation is needed, as is the case for the great majority of loans, even for those with excellent credit. ”.
Even though the underwriting procedure can be difficult, remember that you’re almost done—well done on making the down payment! Your application for final approval—or perhaps conditional approval—should be almost complete if the underwriter requests just a few more documents!
FAQ
How long does it take for an underwriter to approve a loan?
Though it varies depending on the circumstances, underwriting can take a few days to several weeks. Process delays can include missing signatures or paperwork, problems with the appraisal, and problems with title insurance.
Can a loan fall through after underwriting?
Nevertheless, you take different actions based on the reason if your loan was rejected because it did not pass the lending standards following the underwriting procedure. For instance, if there was a problem with your credit report, you might need to reduce debt in order to improve your credit score.
How often do loans fail in underwriting?
What percentage of loan applications are denied by an underwriter? Approximately 10% of mortgage loan applications are denied by an underwriter. Applications for mortgage loans may be rejected for a variety of reasons, such as a borrower’s poor credit history, a recent job change, or an excessive debt-to-income ratio.
Read More :
https://www.rocketmortgage.com/learn/how-long-from-underwriting-to-closing
https://www.realtor.com/advice/finance/how-long-does-underwriting-take/