As you start the process of buying a home, you may be wondering how long everything takes. Specifically, you may be curious about how long the home loan approval process takes. Don’t worry, we’ve got you covered.
In this article, we’re going to highlight how long it takes to get approved for a home loan and what you’ll need before starting the process.
The Home Loan Approval Process
The average time it takes to close on a home in the US is 51 days. However, that time doesn’t reflect how long it takes to get approved for a home loan – and with Total Mortgage’s GreenLight program, you can close in potentially 21 days or less.*
The time it takes to get approved for a home loan is going to depend on a few different factors. With that in mind, the time it takes to close on a home is much longer than 51 days, in most cases.
Consider these activities that have to be completed before you can even start applying for mortgages.
Finding the Right Lender
The first step in the home loan approval process is finding the right lender. When you’re looking to purchase a home, you have to be sure that you’re choosing a lender that’s going to fit your needs. This means that their rates should fall within your ideal area and that they’re going to offer you the money you need to purchase your dream home.
Getting Pre-approved
Before you get approved for an actual mortgage, most lenders are going to require you to go through a pre-approval process. This process involves taking a closer look at your current financial circumstances and ensures that you fit the lender’s qualifications.
For the most part, the pre-approval process shouldn’t take long. Some lenders only take a few seconds to do a quick credit check before a pre-approval is granted. Others take a few days at the most.
Getting Approved for a Home Loan
A pre-approval is going to last anywhere between 30 to 90 days and depends on the lender you’re working with. Getting pre-approved is essentially a green light to move forward with your home search. Then, when you’ve found the perfect home, the real approval process begins.
Home loan approval is a bit different from pre-approval. Approval takes into account your financial details, as well as the characteristics of the home you’re looking to purchase.
When going through the approval process, the lender is going to require specific information about the home, like the title, an inspection, as well as a home appraisal. Most of these are going to be out of your hands.
Approval normally takes a few weeks to process, while closing takes an additional few weeks. This is what makes the process last for 51 days.
Calculate your monthly mortgage payments with Total Mortgage’s Purchase Calculator and get a feel for what you can afford.
How to Speed Up the Home Loan Approval Process
You can speed the home loan approval process up by having all the necessary information ready for the lender. We’re going to cover the 5 things you need to have on hand before you even consider starting the pre-approval process.
1. Proof of Income
Your income is a deciding factor in the approval process. Lenders want to make sure that you’ve got a history of income that will cover the cost of your monthly mortgage payments.
As you begin the pre-approval process, make sure that you have your W-2 statements from the last few years handy. Most lenders want at least two years of coverage, but some may require even more. Include any additional income, too, like alimony, bonuses, or rental income.
2. Proof of Assets
Similar to your proof of income, a lender wants to see that you’ve got the funds to cover your down payment and your closing costs. Most often, the lender wants at least 20% of the home’s value as the down payment, as well as the approximate cost of closing costs.
Make sure to prove the lender with your bank statements and investment account statements.
3. Credit Information
This isn’t necessarily something you provide. Rather, you can speed the approval process up by making sure that your credit is in top shape. Take care of any outstanding collections accounts, as well as any debts that may prevent you from taking out a mortgage.
4. Employment Verification
Lenders want assurances that they’re giving loans to suitable buyers, which means buyers who are employed. Pay stubs are a good way to prove that you’re employed, but some lenders may contact your employer to verify your claims.
Self-employed buyers will usually have to provide more detailed documentation. This includes lengthier employment and income history to make sure that income isn’t volatile.
5. Additional Documentation
You may be required to provide additional documentation. At the very least, a form of identification (driver’s license, state ID) and a social security card will be needed. All of this goes into the necessary credit reports and background checks.
Learn More About the Home Loan Approval Process
If you have additional questions about the home loan approval process, our loan officers can help guide you in the right direction. Total Mortgage has branches throughout the country and we offer a personalized mortgage experience for each borrower.
Explore Total Mortgage’s list of branches in the US to find the one that’s nearest to you. You can also apply online to get a free quote.
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Source: totalmortgage.com