How Long Does It Take To Get A Mortgage?

The typical time frame is about a month. It can be shorter, and sometimes take much longer.

There are two basic ways to get a mortgage:

• full documentation

• stated documentation

In the full documentation you prove to the lender your:

• income

• assets

• work history, job verification

In the stated documentation, all of these are stated and not proven. The advantage to the second option is a lot less paperwork, at the cost of a higher mortgage rate. Some people can’t document steady income (such as commissioned salespeople) or just don’t want to give this information out. There are also hybrid loans between these two options, where you can state your income but prove your assets through bank statements, etc.

If you go the full documentation route, make sure to organize your paperwork. Typically this can involve:

• 2 years of W2s

• a month of pay stubs (for biweekly checks make sure you cover all 30 days!)

• 3 months of bank statements

For self-employed borrowers this can include:

• Business bank statements

• Company tax return

• CPA letter certifying that you filed as a self-employed person

Before the process starts, it is a good idea to check your credit. There may be issues here that need to be fixed. If this is the case, fix them if you can. This time is separate from the one month general estimate for closing a mortgage. Generally speaking, the lower your credit the higher your interest rate and higher your monthly payment.

You can shop around at various places, and should get a written estimate (called a Good Faith Estimate) within 3 days. You should get quotes about the same loan type so that you can compare rates and fees. Getting a quote from one lender about a 30 year fixed is not something you should compare with a quote for a 5 year interest only loan, unless you want general numbers.

There are two basic transaction types: refinances and purchases. Refinances are more straightforward because it is basically just you and the lender. In a purchase it is you, the lender, and a borrower or seller, real estate brokers, etc. This can make the purchase transactions more complicated if people continue to change the price/terms during the process.

Once you choose a lender and they approve you, they may have additional requirements. This can include letters of explanation about credit issues, statement explaining why the residence you are claiming is unusually far from the job you are claiming, etc.

When all of these conditions are met, your loan “goes to docs” and is available for signing. Once you sign these, for a primary residence refinance there is typically a “three day right of rescission”. This gives you three days to change your mind after you have signed on the dotted line. If this is a cash out refinance, you typically get your cash a week after you sign.

Types of problems that you may hit include:

• switching jobs in the middle of the loan process (it happens!)

• job verification issues (wrong job title given)

• not enough assets to document

• your credit changes in the middle of the process because you make a late payment on something critical, such as a mortgage, and the lender finds out

• your rate lock may expire

• Buyers and sellers in a purchase may incorrectly modify their contracts so the language is unclear to the lender (I have seen a loan held up because it was unclear as to what the value of the curtains were that would be left behind!)

• Signer issues – sometimes a selling property has multiple sellers and they are difficult to reach to sign or update contracts and paperwork. Sometimes this is because one of the sellers is not very enthusiastic about selling and is just dragging the process out

• Issues with the appraisal value – the property value is not high enough to support the contract value without additional explanation, new comparable properties, etc.

• Title issues – there are unresolved issues about title

Sometimes the  mortgage process can take less than 10 days if all the stars are aligned. It requires tight coordination between you and the lender.

Always make sure you are available to answer questions and address problems as soon as they arise. The hassle of doing a full documentation loan is usually worth it in terms of lower fees and rates.