The Wait For Mortgage Underwriting: How Long Till Approval?

The mortgage underwriting process is a critical step in the mortgage approval timeline. It involves a mortgage lender evaluating a borrower's income, credit history, and the value of a property to determine whether to approve a mortgage loan. The duration of the underwriting process varies on a case-by-case basis, with some sources stating that it can take anywhere from a few days to several weeks or around 40 days on average. The process can be complicated and time-consuming, but there are ways to help it go more smoothly. For example, responding promptly to requests for information and ensuring all credit accounts are current and error-free can expedite the process.

The average underwriting timeline

The underwriting process involves evaluating the borrower's income, credit history, and the value of the property to ensure the borrower can handle the mortgage payments. This process can be complicated and time-consuming, but there are ways to help it go more smoothly. For example, having a higher credit score and a lower loan-to-value (LTV) ratio can make it easier to obtain approval. A larger down payment can also help reduce the LTV ratio.

During the underwriting process, it is essential to be responsive to requests for information. Any missing signatures or documents, issues with the appraisal, or title insurance can cause delays. Communicating any delays in providing requested documents to the mortgage loan officer is crucial. It is also recommended to avoid taking on new debt or making significant financial changes during this time, as they can impact the debt-to-income ratio and, consequently, mortgage approval.

While the average underwriting timeline is around 30 to 45 days, it can be shorter or longer depending on the borrower's situation and the complexity of the application. Some borrowers may receive approval in a matter of weeks, while others may experience longer wait times. Pre-approval and pre-underwriting processes can help identify potential issues and streamline the final underwriting process.

Factors that slow down the process

The mortgage underwriting approval process can take anywhere from a few days to several weeks or about 40 days on average. This process can be slowed down by several factors, including:

• Missing signatures or documents: The underwriting process requires a lot of documentation, and missing signatures or documents can cause delays. It is important to be responsive to requests for information and communicate any delays in providing the requested documents.
• Low credit score: A low credit score can make it more difficult to get approved for a mortgage and may result in a higher interest rate. A low credit score can also be a reason for an underwriter to deny the application.
• Insufficient income: Underwriters evaluate your finances to determine if you can repay the loan on time. If your income is insufficient to cover the monthly mortgage payments, your application may be denied.
• High debt-to-income ratio: Underwriters consider your debt-to-income ratio (DTI) to assess your ability to repay the loan. A high DTI may indicate that you are a riskier borrower.
• Property issues: If the appraisal comes in lower than the home's sale price, it can create slowdowns. The underwriter might not approve the full amount, requiring negotiation or additional funds.
• Title issues: A title search ensures there are no liens, claims, unpaid taxes, judgments, or unpaid HOA dues on the property. Issues with the title can delay the underwriting process.
• Employment history: Unexplained gaps in your employment history can raise red flags and cause delays in the underwriting process.
• Unverifiable funds: If the underwriter cannot verify your funds, it can lead to delays or even suspension of your application.
• Market conditions: A booming housing market can lead to longer underwriting times due to a higher number of loan applications.

Pre-approval and pre-underwriting

Pre-underwriting takes your average pre-approval a step further. It means that your lender will put your loan application through the scrutiny of the underwriting process before you're under contract for a house. An underwriter will do all the work that usually comes after an offer is accepted before you even start looking at homes. They will thoroughly vet your financials to evaluate the risk associated with granting you a loan. Pre-underwriting is a more intensive process and can take a few weeks, so it is not necessary for everyone. However, in highly competitive markets, it may be the thing that gives you the edge over other buyers.

The mortgage underwriting process is the final step to getting a mortgage loan. It is a complicated and time-consuming process that can take anywhere from a few days to several weeks. It involves the lender taking an in-depth look at your credit and financial background to determine if you're eligible for a loan. They will verify your identity, check your credit history, and assess your finances, including your income, cash reserves, investments, and debts. The underwriter will also consider the LTV ratio of your mortgage: how much money you're borrowing divided by the property's value.

You can take steps to help the underwriting process go more smoothly. Before applying, it is a good idea to improve your credit score, as a lower score can make it more difficult to get approved and can result in a higher interest rate. You can also reduce your LTV ratio by making a larger down payment upfront. During the underwriting process, be very responsive to requests for information and avoid taking on new debt or making other financial changes.

The role of a mortgage processor

The mortgage underwriting approval process can take anywhere from a few days to several weeks or even months, depending on the complexity of the case and whether any issues arise. The average amount of time it takes is around 40 days.

Now, what about the role of a mortgage processor in this process?

A mortgage processor, or loan processor, is a financial professional who plays a pivotal role in the mortgage lending process. They are responsible for handling the administrative tasks and paperwork required to get loans approved. They act as a bridge between the loan officer, who works directly with the borrower, and the underwriter, who makes the final decision on loan approval.

• Collecting and reviewing financial documents: This includes W-2 forms, pay stubs, bank statements, and credit report files. They verify the financial information provided by the borrower.
• Collaborating with the loan underwriter: Mortgage processors work closely with underwriters to ensure they have all the necessary documents and information to make a decision. They also address any additional requests or conditions from the underwriter.
• Scheduling the closing: In the final stages, the mortgage processor ensures the loan file is complete and ready for closing. They schedule the signing and verify the down payment and closing costs.
• Keeping track of deadlines: Mortgage processors ensure the loan process stays on schedule to avoid any extension fees.
• Organizing and preparing information: They ensure all documents are properly organized, filed, and categorized for the underwriter's review.
• Guiding borrowers: Mortgage processors assist borrowers throughout the loan application process, helping them navigate the complexities of obtaining financing.

Mortgage processors are often the unsung heroes of the lending industry. Their meticulous work behind the scenes is crucial in turning homeownership dreams into reality.

What to do if your application is denied

The mortgage underwriting process can take anywhere from a few days to several weeks or about 40 days on average. The process involves a lender examining your income and financial history to assess your ability to make monthly mortgage payments.

Now, if your mortgage application is denied, don't panic. Here are some steps you can take to get back on track:

• Understand the reason for the denial: Lenders are legally required to provide a written explanation for their decision if you ask for one. Common reasons for denial include low credit scores, high debt-to-income ratios, and recent job changes. Knowing the specific reason will help you address the issue effectively.
• Contact your loan officer or broker: They can help clarify the details of the adverse action letter and guide you on your options. Sometimes, the denial may be due to a simple issue, such as a missing form or a typo, which can be easily rectified.
• Improve your creditworthiness: Work on improving your financial profile by paying off existing debt, maintaining stable employment, and avoiding taking on new debt or making large purchases. A higher credit score can increase your chances of approval and result in a lower interest rate on your loan.
• Explore other options: Consider looking for a different type of mortgage or finding a new lender who may be more willing to work with your financial situation. You can also explore getting prequalified or preapproved to gain a better understanding of your eligibility and borrowing capacity.
• Take preventative measures: Ensure all your credit accounts are current, and verify that your credit report is accurate and free of errors. Take preventative steps to maintain a strong financial profile and minimise the chances of future denials.
• Be responsive: During the underwriting process, respond promptly to any requests for additional information. Delays in providing necessary documentation can slow down the process and potentially impact the outcome.

Frequently asked questions