How Long Does It Take for Underwriter to Review Mortgage Application

Underwriting is a disquisitional function of mortgage lending and typically takes anywhere from several days to a couple of months. Mortgage underwriting uses the borrower's financial data and property information to make up one's mind loan approvals. This process begins with the mortgage application and ends but before the borrower closes on their dwelling house.

What is mortgage underwriting?

Mortgage underwriting is an in-depth examination of a loan bidder's financial information and credit history and details about the holding to determine the applicant's qualification for a mortgage loan. The underwriter is responsible for analyzing the borrower's credit, capacity to repay the loan and collateral to ensure the lender is making a financially sound loan decision.

For befitting loans, underwriters must follow lending guidelines gear up past Fannie Mae and Freddie Mac.

For loans to be conforming, the underwriter must follow lending guidelines set up by Fannie Mae and Freddie Mac, government-backed enterprises that purchase mortgages from lenders and sell these loan packages equally mortgage-backed securities (MBS) to investors.

An important part of underwriting is verifying the borrower's information on the application. Because the applicant could falsify this data (although this is illegal), the underwriter must investigate and verify every item to ensure its accuracy.

They need to ensure the borrower'southward income matches the amount they stated, for instance, with a pay stub or a W-two. Annual income is a big factor in helping the lender decide how much a borrower can comfortably afford to repay.

The entire underwriting process, from the fourth dimension your awarding is submitted to the solar day y'all close on your dwelling house, ordinarily takes between 30 and 60 days, but information technology tin can be shorter. You'll probably want to start the application process equally soon as you're set to outset looking at homes.

Though many of the reviewers on our site study cursory underwriting processes — from a few days to two weeks, in many cases — many factors can ho-hum the procedure down. A reviewer from Arizona, for example, said underwriting took "forever" because the appraisement team underappraised the abode "by at least $20,000."

The underwriting process

The underwriting process starts when you lot apply for a mortgage with a lender and ends when you receive the Closing Disclosure, a required class that outlines the terms of your loan. The process may vary slightly from lender to lender, merely it tends to follow the general steps listed below.

1. Applying with a lender

Outset, you'll submit a mortgage application to your lender. Yous can exercise this online (which may be quickest) or in person at your lender's office. Yous'll provide personal information like your proper name, address and Social Security number. You'll also need to provide detailed financial information, such as your income and depository financial institution account balances.

Have your fourth dimension when completing the application — you want to brand sure the information y'all provide is right. Your signature acknowledges that the information is both true and authentic to the all-time of your knowledge.

two. Verification of personal data and preapproval

In one case you submit the awarding, your lender volition require yous to upload documents like Due west-2s, revenue enhancement returns, depository financial institution account statements, etc. This lets the underwriter verify your income and other avails. When the underwriter has completed a review of your finances, you should receive a preapproval determination within one to ii weeks.

Advisedly reviewing your application for accuracy and promptly submitted requested documents helps avoid delays in the underwriting procedure.

Preapproval gives you an idea of how much dwelling house you tin can afford and lets y'all lock in an interest rate before y'all've institute the perfect home. If you lot're preapproved, yous'll receive a letter of the alphabet with information about your loan maximum, which yous can use to brand offers on homes. (Preapproval letters do take an expiration date, which is typically 60 to 90 days, depending on the lender.)

iii. Appraisal

At this bespeak, the underwriting procedure substantially pauses until you've plant a domicile to buy and the seller accepts your offer. Then the underwriter evaluates the collateral on the loan (the home itself). They demand to ensure the dwelling is at least worth what y'all're borrowing.

The underwriter will order a home appraisal conducted by a certified appraiser who inspects the dwelling house'due south condition and compares information technology with similar homes in the surface area. The home appraiser volition so study an assessed value to the underwriter, usually within a few days of the appraisal. In some cases, yous may exist granted an appraisal waiver if the home'southward value can be determined through other methods.

4. Championship search

The underwriter will likewise require a championship search, which is a thorough review of public documents. The title search ensures that the habitation's title tin can exist successfully transferred from the seller to the buyer at endmost. Depending on your state'due south requirements, you tin can hire a title company or a existent estate attorney to consummate the championship search. This pace in the underwriting process could take ten to 14 days to consummate.

Some steps can happen simultaneously, like the title search and the appraisal. This helps speed up the process.

five. Underwriting decision

The underwriter will reach a final conclusion once the title search and appraisal are complete. They may besides require additional data from y'all at this time. For example, if the underwriter notices a contempo large purchase, you may demand to write a alphabetic character explaining the purchase or withdrawal.

In general, it's best to refrain from making big purchases during the underwriting procedure considering it could interfere with the approval decision. You'll also need to refrain from opening new credit during the closing process. Underwriters will pull your credit report over again just prior to closing to ensure there are no major changes.

If the underwriter is satisfied with the championship search and appraisal results, you lot should receive a verified blessing decision inside a week or two. Some decisions may arrive sooner (within a few days), depending on how many applications the underwriter is currently treatment.

In one case yous receive verified approval, y'all'll also get the Closing Disclosure to review before closing. This v-page document finalizes your mortgage loan terms; lenders are required to provide information technology at least three business organisation days before the closing engagement. This gives you time to review the loan details before signing the agreement at endmost.

6. Endmost

The endmost occurs on a specific date, commonly 30 to 60 days after credence of the purchase offer. You'll sign the Closing Disclosure and other legal documents, like the notation. Information technology's important to annotation the cash-to-close amount detailed on the Closing Disclosure — these are the funds you'll need to bring to closing (either past wire transfer or by cashier's bank check).

How to speed up the process

If you desire to ensure a smoothen procedure, having good or excellent credit can help. Many lenders employ automated underwriting to speed up the initial blessing decisions. Automated underwriting instantly approves borrowers that run into or exceed the lender'south specified credit contour. Also, y'all'll want to ensure that the information you lot provide on the application is both accurate and current — whatever discrepancies could issue in your application existence flagged and delayed.

To forestall delays, avoid whatsoever major changes to your credit in one case you start the underwriting procedure.

Fifty-fifty if the lender uses an automated system, some aspects of the underwriting process must be completed past an underwriter, similar the verification of financial documents. You can speed up this part of the procedure by having these documents ready to scan (usually the lender volition list these documents on the application).

Once yous submit your application online, you can usually provide these documents right abroad through the portal.

Another way to speed up the process is to reply promptly to any requests from the underwriter. Often they'll alert your mortgage loan officer if they need more information, but some will contact you through the loan portal, so you'll desire to log in regularly to check for requests.

You'll also desire to avert opening new credit accounts during the underwriting process and before closing (this includes financing new furniture for your home). Your underwriter volition pull your credit report again just before closing to ensure there are no major changes. Any new changes could delay or compromise your final approval.

FAQ about underwriting

The underwriter is responsible for closely examining your financial information and details nearly the property to make up one's mind your overall risk as a borrower. They must follow lender guidelines and federal regulations to decide loan eligibility.

According to a written report from the Consumer Fiscal Protection Agency, the overall denial charge per unit for home purchase applications was 9.three% in 2020. FHA loan applications had the highest deprival rate, at xiv.1%, while conventional conforming loans had the lowest (vii.6%). In general, the most common reasons for denials are low credit scores and high DTI ratios.

Final underwriting blessing (also called verified approving) means the underwriter is satisfied with both the borrower's creditworthiness and the value of the collateral. Your loan terms are finalized (interest rate, maturity appointment, loan amount, etc.), and you'll be able to proceed with the closing and purchase the home with your loan funds.

Lesser line

Underwriting is a critical part of the mortgage process, determining whether yous are qualified to take out a loan to buy a item home. Underwriting begins when you submit a mortgage awarding and ends just before you close on your dwelling.

The unabridged procedure usually takes from 30 to 60 days, and it includes steps like the appraisal and title search. Yous tin help speed upwards the procedure by having fantabulous credit and promptly responding to the underwriter's requests for information. You tin avoid delaying your terminal underwriting approval by providing accurate data on your application and not opening any new credit accounts earlier you shut on your dwelling.

ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their piece of work. To learn more about the content on our site, visit our FAQ page.

1. Federal Housing Finance Agency, "Fannie Mae and Freddie Mac." Accessed March 21, 2022.
2. Consumer Financial Protection Agency, "Become a prequalification or preapproval letter." Accessed March xx, 2022.
3. Consumer Fiscal Protection Agency, "Data Betoken: 2020 Mortgage Market place Activity and Trends." Accessed March 21, 2022.

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