How long does it take for underwriters to approve mortgage?
The mortgage underwriting process can take anywhere from a few days to a few weeks. The timeline varies depending on whether the underwriter needs more information from you, how busy the lender is and how streamlined the lender's practices are.
How long does mortgage underwriting take? Underwriting can take as little as a few days or as long as a few weeks. It takes place after you have an accepted contract on a home, but before closing.
Final approval
Ideally, once the terms of your conditional approval have been met, the underwriter will issue final approval. This means you're 'clear to close. ' If you're denied, ask your lender why, and what you can do to have the decision overturned.
You may be wondering how often underwriters denies loans? According to the mortgage data firm HSH.com, about 8% of mortgage applications are denied, though denial rates vary by location and loan type. For example, FHA loans have different requirements that may make getting the loan easier than other loan types.
Milestone | Time to Complete |
---|---|
Appraisal | 1-2 weeks for completion |
Underwriting | 1 to 3 days for initial review |
Conditional Approval | 1 to 2 weeks for additional underwriting review and clearing of conditions |
Cleared to Close | 3 day mandated minimum for acknowledging Closing Disclosure |
Yes. Many lenders use third-party “loan audit” companies to validate your income, debt and assets again before you sign closing papers. If they discover major changes to your credit, income or cash to close, your loan could be denied.
As a loan officer, one of the most important things that will accelerate the underwriting process and increase the chances of successful mortgage loan approval is providing your client's correct and most recent information. The data you provide to the underwriter for examination should be accurate and verifiable.
For this reason, the interaction between a loan officer and an underwriter is limited to a simple transfer of the borrower's facts and data. A loan officer may not attempt to influence the underwriter. Loan officers and underwriters are both crucial roles in the home buying process.
Mortgage companies and other lending institutions may review any data contained within your credit reports. Data from the past 24 months is the most important information that mortgage lenders look at.
You can usually get a feel for whether you're mortgage-eligible by looking at your own personal finances and assessing your financial situation. You'll have the best chances at mortgage approval if: Your credit score is above 620. You have a down payment of 3-5% or more.
Do underwriters watch your bank account?
Your recent bank statements show if you can afford the down payment and closing costs, as well as monthly mortgage payments. As they are essential to this, your lenders check bank statements, deposits, and withdrawals for red flags — particularly negative balances resulting from overdrafts or non-sufficient funds fees.
Lenders typically deny your loan if they see the home as a bad investment during the appraisal process. Although it's not a good feeling to have your loan denied, it might be the best case scenario – you don't want to purchase a home laden with problems in need of fixing.
An underwriter can deny a home loan for a multitude of reasons, including a low credit score, a change in employment status or a high debt-to-income (DTI) ratio. If they deny your loan application, legally, they have to provide you with a disclosure letter that explains why.
Keep in mind, however, that underwriting is just one part of the overall lending process. You can expect to completely close on a loan in 40-50 days. The average new-purchase mortgage took 47 days to close in Jan. 2024, according to ICE Mortgage Technology.
You may have heard the term before, but what does underwriting mean exactly? Mortgage underwriting is what happens behind the scenes once you submit your application. It's the process a lender uses to take an in-depth look at your credit and financial background to determine if you're eligible for a loan.
The last step, mortgage underwriting, ensures the borrower (homeowner) meets loan requirements set by the lender (bank). During the underwriting process, your loan application is reviewed, verified, and evaluated in four main categories: 1) credit report and credit score, 2) income, 3) assets, and 4) property.
You shouldn't worry about underwriting if you meet the requirements for your loan type. Getting an initial approval helps because it gives you an idea of what you can afford – a lender uses your credit report, income, assets and debts to make a preliminary assessment of your qualifications.
Do Lenders Check Your Credit Again Before Closing? Yes, lenders typically run your credit a second time before closing, so it's wise to exercise caution with your credit during escrow. One of your chief goals during escrow should be to ensure nothing changes in your credit that could derail your closing.
They'll look at your monthly income, monthly payments, expense history, cash reserves and reasonable withdrawals. More specifically, mortgage companies or lenders will look at the following: Monthly income: Verification of the amount and frequency of the pay from your employer.
During this process, the underwriter may need to request additional information from you. They might need more recent documents, or an explanation letter for any questions they have, such as where a large deposit in your savings account came from. This is often where the process can get held up, delaying your closing.
Does the loan officer do the underwriting?
Loan officers partially share the duty of assessing eligibility with underwriters. However, a loan officer only assists clients in finding and applying for loans they are likely to qualify for, while an underwriter has final authority in approval.
Underwriters normally work regular business hours. They may occasionally need to work nights or weekends when they need to meet deadlines. An underwriter's salary may depend on their experience and certifications. The size, type and location of the business in which they work could also affect their salary.
If a home loan is denied after closing on a home purchase, then buyer would typically lose their deposit and the purchase agreement would become void. The seller would then put the home back on the market.
Underwriting helps ensure your file meets the loan program guidelines and you can afford the mortgage payment. It's designed to keep the likelihood of default at a minimum. Contrary to what you may believe, lenders do want homeowners to be able to make payments in a timely manner rather than miss payments.
If the lender doesn't approve your loan by the closing date, then the purchase contract may expire. The seller might agree to push back the closing date to allow you more time to get your loan, but they don't have to. If your loan is not approved, the sale will fall through completely.
References
- https://quickbooks.intuit.com/learn-support/en-us/help-article/merchant-services/merchants-need-know-level-3-data-processing/L1LOqVeky_US_en_US
- https://www.indeed.com/career-advice/careers/what-does-an-underwriter-do
- https://hoa.org.uk/advice/guides-for-homeowners/i-am-buying/long-take-get-mortgage/
- https://www.homelight.com/blog/buyer-how-long-to-get-preapproved-for-a-mortgage/
- https://www.unbiased.co.uk/news/mortgages/mortgage-market-opens-up-to-bad-credit-homebuyers
- https://www.forbes.com/health/senior-living/affordable-housing-for-seniors/
- http://www.nfitfiji.com/personal-finances/the-three-cs-of-credit/
- https://money.usnews.com/loans/mortgages/articles/historical-mortgage-rates
- https://www.bankrate.com/mortgages/steps-in-underwriting-process/
- https://www.wsj.com/articles/mortgages-for-seniors-11675893256
- https://www.investopedia.com/personal-finance/top-three-credit-bureaus/
- https://www.thebalancemoney.com/when-the-buyer-cannot-close-escrow-on-time-4063785
- https://www.uswitch.com/mortgages/guides/how-long-does-it-take-to-get-a-mortgage/
- https://raleighrealtyhomes.com/blog/why-mortgages-are-difficult/
- https://www.experian.com/blogs/ask-experian/why-would-a-mortgage-get-denied/
- https://moneytips.com/mortgages/applying/how-mortgages-work/how-often-does-an-underwriter-deny-a-loan/
- https://www.usbank.com/home-loans/mortgage/first-time-home-buyers/credit-score-for-mortgage.html
- https://www.aarp.org/money/credit-loans-debt/info-2023/mortgage-rejection-rates-spike-as-you-age.html
- https://haysto.com/mortgage-guide/best-bad-credit-mortgage-lenders
- https://societymortgage.com/mortgage-tips/do-underwriters-check-bank-statements-before-closing/
- https://www.rockethomes.com/blog/home-buying/how-often-does-an-underwriter-deny-a-loan
- https://www.bankrate.com/real-estate/housing-market-2024/
- https://corporatefinanceinstitute.com/resources/commercial-lending/types-of-credit/
- https://www.sofi.com/learn/content/monthly-cost-200000-mortgage/
- https://www.habito.com/hub/article/how-long-does-a-mortgage-application-take
- https://www.sunnyavenue.co.uk/insight/what-happens-after-mortgage-offer
- https://www.rocketmortgage.com/learn/what-is-underwriting
- https://www.investopedia.com/terms/c/capital.asp
- https://www.lloydsbank.com/mortgages/help-and-guidance/first-time-buyer-help/how-long-does-it-take-to-get-a-mortgage.html
- https://www.linkedin.com/pulse/essential-guide-capital-raising-kison-patel
- https://mortgagekey.co.uk/mortgage-credit-reports-and-checks
- https://www.rubyhome.com/blog/mortgage-loan-process/
- https://mortgagemark.com/home-loan-process/mortgage-loan-process/
- https://www.bankrate.com/mortgages/mortgages-for-seniors/
- https://www.lendingtree.com/home/mortgage/denied-credit-for-home-loan/
- https://www.fool.com/the-ascent/mortgages/articles/buying-a-home-in-your-50s-it-pays-to-consider-this-type-of-mortgage/
- https://www.payway.com/blog/how-to-lower-interchange-rates-with-level-3-processing
- https://www.quickenloans.com/learn/how-often-does-an-underwriter-deny-a-loan
- https://www.aaltomortgages.com/6-month-rule/
- https://capway.com/learnmoney/content/88MHPcR0Jy/The-3-C-s-of-Credit-Character-Capital-and-Capacity
- https://www.investopedia.com/terms/c/capitalstructure.asp
- https://www.cnbc.com/select/best-mortgages-seniors/
- https://www.penfed.org/mortgage-knowledge-center/what-to-expect-on-closing-day-as-a-buyer
- https://www.ii.co.uk/analysis-commentary/later-milestones-retiring-paying-mortgage-ii528626
- https://www.investopedia.com/ask/answers/040115/what-most-important-c-five-cs-credit.asp
- https://www.businessinsider.com/personal-finance/will-mortgage-rates-go-down-in-2024
- https://www.quora.com/If-your-loan-is-denied-after-closing-on-a-home-purchase-what-happens
- https://housenumbers.io/blog/when-mortgage-goes-to-underwriting/
- https://www.nerdwallet.com/article/finance/3-credit-bureaus
- https://www.cnbc.com/select/how-long-does-it-take-to-close-on-a-house/
- https://www.waterstonemortgage.com/blog/mortgage-basics/2023/12/mortgage-approval-process-timeline
- https://www.marketplace.org/2023/02/15/it-can-be-harder-for-seniors-to-get-mortgages-research-shows/
- https://www.rocketmoney.com/learn/homeownership/what-mortgage-lenders-look-for-on-bank-statements
- https://www.investopedia.com/mortgage-process-explained-5213694
- https://www.cuddiganlaw.com/blog/how-money-in-the-bank-or-other-assets-may-affect-your-eligibility-for-social-security-disability.cfm
- https://www.nar.realtor/newsroom/in-the-news/2023-was-the-worst-year-to-buy-a-house-since-the-1990s-but-theres-hope-for-2024-npr
- https://www.theforage.com/blog/careers/loan-officer-vs-underwriter
- https://www.wisbank.com/events/6-cs-to-a-lenders-decision-making-process/
- https://www.usbank.com/home-loans/mortgage/first-time-home-buyers/mortgage-underwriting-process.html
- https://www.skylacu.com/learning-guidance/time-it-take-to-get-mortgage-approved
- https://www.kbhshomeloans.com/learning-center/insight/2022/the-6-major-steps-in-mortgage-loan-processing/
- https://www.bankrate.com/mortgages/mortgage-application-questions/
- https://www.realtor.com/advice/finance/youre-retired-but-can-you-still-get-a-30-year-mortgage/
- https://capitalbankmd.com/home-loans-101/20-vs-30-year-mortgage-which-one-is-right-for-you/
- https://www.rocketmortgage.com/learn/mortgage-loan-process
- https://www.yourinvestmentpropertymag.com.au/buying-property/2024-property-predictions-what-s-in-store
- https://www.investopedia.com/articles/mortgages-real-estate/08/homebuyer-financing-option.asp
- https://housenumbers.io/blog/mortgage-underwriting-process/
- https://www.stlouisfed.org/education/making-personal-finance-decisions-curriculum-unit/three-cs-of-credit
- https://www.paisabazaar.com/personal-loan/eligibility-calculator/
- https://blog.alta.org/2015/11/how-to-comply-with-the-closing-disclosures-three-day-rule.html
- https://themortgagereports.com/47861/what-are-your-chances-of-mortgage-approval-down-payment-credit-score
- https://www.rocketmortgage.com/learn/what-to-do-if-your-mortgage-loan-application-is-denied
- https://www.thisoldhouse.com/home-finances/21015657/are-you-ever-too-old-to-get-a-mortgage
- https://www.investopedia.com/articles/investing/010717/buying-house-single-income.asp
- https://mortgagerequired.com/blog/what-you-should-do-after-receiving-your-mortgage
- https://www.bankrate.com/real-estate/how-long-to-close-on-house/
- https://www.quora.com/Is-buying-another-house-easy-for-people-who-already-own-a-house
- https://www.fool.com/the-ascent/mortgages/factors-determining-mortgage-approval/
- https://www.experian.com/blogs/ask-experian/what-happens-if-your-credit-changes-before-closing/
- https://www.businessinsider.com/personal-finance/can-you-get-mortgage-with-only-social-security-income
- https://money.usnews.com/loans/mortgages/mortgage-rate-forecast
- https://www.britannica.com/money/factors-of-production
- https://www.lendingtree.com/home/mortgage/credit-score-needed-buy-house/
- https://www.nku.edu/~codek/PTHO/pdf/UNIT03S-01.pdf
- https://themortgagereports.com/72583/how-long-does-underwriting-take
- https://movement.com/blog/2023/03/5-preventable-reasons-pre-approved-mortgages-get-denied
- https://www.valuepenguin.com/mortgages/average-time-to-close-on-a-house
- https://wallethub.com/answers/pl/how-much-can-i-borrow-with-a-720-credit-score-1000508-2140806892/
- https://www.creditguru.com/index.php/credit-management/commercial-credit-management-articles/79-what-are-the-4-cs-of-credit
- https://awesometechinc.com/seven-effective-ways-loan-officers-can-help-speed-up-the-underwriting-process/
- https://www.rocketmortgage.com/learn/refinance-programs-for-seniors
- https://www.theinvestorsedge.com/blog/what-are-the-slowest-months-for-real-estate
- https://www.rocketmortgage.com/learn/how-long-from-underwriting-to-closing
- https://www.westpac.com.au/about-westpac/media/media-releases/2014/14-june/
- https://www.investopedia.com/articles/personal-finance/020615/getting-mortgage-your-50s.asp
- https://www.helcim.com/guides/level-three-data/
- https://www.investopedia.com/terms/f/five-c-credit.asp
- https://www.thestreet.com/personal-finance/why-its-getting-harder-to-get-a-loan-from-your-bank
- https://www.bankatfirst.com/business/resources/commercial/purpose-where-four-cs-credit-worthiness-converge.html
- https://themortgagereports.com/17336/mortgage-quick-closing-ellie-mae-interest-rates
- https://www.forbes.com/sites/brendarichardson/2021/10/29/nearly-10-million-homeowners-65-and-older-are-still-saddled-with-mortgage-debt/
- https://themortgagereports.com/60184/senior-home-buying-programs-and-mortgages-for-retirees
- https://www.readynest.com/homebuyer-stories/what-to-expect-the-week-before-closing-on-a-house
- https://www.creditstrong.com/how-much-credit-history-is-needed-to-buy-a-house/
- https://www.upnest.com/1/post/clear-to-close/
- https://www.ssa.gov/pubs/EN-05-11125.pdf
- https://www.credible.com/mortgage/how-long-does-underwriting-take
- https://www.goodvibesquad.com/blog/can-a-loan-officer-influence-underwriter/
- https://www.rocketmortgage.com/learn/closing-disclosure
- https://academicprograms.humboldt.edu/sites/default/files/howtocalculatescu.pdf
- https://time.com/personal-finance/article/what-credit-score-do-i-need-to-buy-a-house/
- https://www.realtor.com/advice/finance/how-long-does-underwriting-take/
- https://www.highradius.com/resources/Blog/5-cs-of-credit-a-complete-guide/
- https://www.quickenloans.com/learn/using-social-security-income-to-qualify-for-a-mortgage
- https://finance.yahoo.com/news/more-americans-tried-mortgage-loans-170251861.html
- https://www.thezebra.com/resources/home/average-age-of-first-time-homebuyers/
- https://refi.com/how-long-will-it-take-to-get-your-mortgage-approved/
- https://www.forbes.com/uk/advisor/mortgages/how-to-get-a-mortgage/
- https://startswith.us/approach/
- https://www.refinery29.com/en-gb/countries-where-its-hardest-to-get-on-property-ladder
- https://www.quora.com/At-what-age-is-it-too-late-to-purchase-a-home
- https://smartasset.com/mortgage/things-to-avoid-before-applying-for-mortgage
- https://quizlet.com/553620448/personal-finance-chapter-9-flash-cards/
- https://www.capitalone.com/learn-grow/money-management/five-cs-of-credit/
- https://stellarfi.com/answer/what-credit-score-is-needed-to-buy-a-300k-house