You finally found a home and now you want to close on it right away! You have the 20 percent to put down and good credit, so you know you will qualify to receive a conventional mortgage. Your biggest concern at the moment is how long it will take to close on the mortgage. While there is no finite time period that you can say you will have your mortgage closed, there are certain factors that you can assist with to help speed the process along. The typical wait time is anywhere between 2 weeks and 30 days, but if you do your part in a timely manner, you can make your timer period closer to that 2 week mark.
Create a Complete Application
Banks need a lot of information in order to approve you for a mortgage, including a conventional mortgage and it all starts with the mortgage application. As tedious as this piece of paper might seem, it is to your benefit to answer every question as thoroughly as possible. If you do not answer questions pertaining to your income, employment, housing history, or even your personal information, it could significantly delay the processing of your loan because the loan officer and/or underwriter will need to track this information down.
Gather your Important Documents
The sooner you have your mortgage documents in hand, the quicker the loan process will go. The basic documents you can have ready before you even apply because every conventional mortgage requires them include:
- Pay stubs covering the last 2 pay periods
- W-2s from the last two years
- Tax returns with all schedules from the last 2 years
- Bank statements covering the last 3 months at a minimum
These are the basic documents underwriters will require, so providing them up front can really help to speed things up. This is not to say that the lender will not ask for more information down the road, but once you have the baseline set up, you can provide the additional documents rather quickly, helping your loan to close faster.
Monitor your Qualifying Factors
Your qualifying factors also play an important role in how quickly you can close on your conventional mortgage. If you have a straightforward loan with a 700 credit score, 28/31 debt ratio, stable employment history for the last few years, and you are putting 20 percent down on the home, the underwriting process can be rather smooth. On the other hand, if you have qualifying factors that are not quite as straightforward or that require a little more evaluation than the above factors, it can slow the process down. Some of the most common reasons underwriters have to question certain items and evaluate them further include:
- Sketchy employment histories
- Inconsistent income history
- Questionable items in your credit history
- Odd housing history
- Borderline debt ratios
- High loan-to-value ratios
Basically, the riskier your loan profile, the more evaluation the underwriter has to do which equals a longer time to the closing table.
You can gauge your time to closing based on how organized you are for the lender. The loan officer and underwriter go through the same process for every loan. What really matters is how often they have to keep coming back to you to ask for more information or to clarify certain items. The best way to speed the process up is to plan ahead so that you can get your financial and personal affairs in order and have the supporting documentation that the lender requires to get started right away.