A home is the largest purchase you'll likely ever make, so it makes sense that getting a mortgage is an equally big undertaking. You can expect the process to take around 52 days on average, according to mortgage processing software company Ellie Mae. And that's not including the time it takes to find a home and negotiate a price with the owners.
You might not be able to shorten every part of the mortgage underwriting process. After all, it's in someone else's hands for a good portion of the time. But there are certain things you can do to speed it up so you're not in limbo while waiting to move in. Learn these tips, what questions you should ask during the process, and what traits to look for in a mortgage broker.
- It takes an average of 52 days to close on a mortgage.
- Use services like mortgage brokers or comparison sites to help you quickly find a lender.
- Set aside any documents you might need ahead of time so you can quickly respond to lender requests.
- Keep track of all of your communications so you know when to follow up with lenders.
Gather Your Documents
Most lenders will require the same information when you apply for a loan. Gather all this ahead of time—and keep it in a well-organized file system on your computer so you can immediately hand it over when requested. This will save you a lot of time.
Here's what to round up:
- Social Security number
- Two most recent bank statements
- Two years' worth of past tax returns
- Copy of your ID (such as a driver's license)
- Certifications of any homebuyer counseling or education programs you completed, if needed
- Documentation of any other income sources, such as alimony, child support, side-hustle income, etc.
- Documentation of any name changes, such as if you changed your name after getting married or changing gender
If you're self-employed, you'll need:
- Two years' worth of business tax returns
- Current business profit & loss (P&L) statement
If you work for an employer, you'll need:
- Two years' worth of W-2 forms
- Pay stubs from the most recent 30 days
In addition, lenders will want to see information about your down payment:
- If you saved any money yourself: Two months' worth of statements for your bank account to establish ownership of the funds
- If you received any gifts or down-payment assistance: A signed statement from the person or organization that gave you the money, stating that the cash was a gift
Know Your Credit
There is a range of different types of mortgages aimed at people with differing credit scores. For example, some Federal Housing Administration (FHA) loans target people with less-than-perfect credit (minimum 500, with a 10% down payment and limited to a maximum loan-to-asset-value ratio [LTV] of 90%). Other lenders aim for higher-scoring customers.
Knowing your credit score gives you two advantages: You can check your credit report for any errors, and you'll know better which type of mortgage you might be eligible for. That way, you won't waste your time applying for mortgages that you're not likely to get.
It's important to know your credit score, which you can check for free on many sites. But even if you know your credit score already, it's equally important to check your credit report, too. That's where any errors will appear, and you'll want to reach out to credit bureaus to fix those errors.
Use Comparison Sites
The internet is full of comparison shopping websites for mortgages, and these can be a great way to cover a lot of ground quickly in your mortgage search. Many of them have the same lenders in their networks, so don't fret too much about using all of the comparison sites available.
Besides, one of the downsides of using these lists is that you'll likely be added to marketing lists. You don't want to sign yourself up for a daily barrage of calls, especially from the same lenders.
While comparison sites are helpful, it's also important to do some groundwork yourself. It's possible that some of the best lenders for you aren't on these sites. Make a quick list of lenders you don't see quoted, and make sure to reach out to them as well. Many local credit unions don't participate in these sites, for example, and they sometimes can offer lower mortgage rates than banks.
Start Preapproval With Multiple Lenders
Getting preapproved on a mortgage means that you go ahead and complete part of the underwriting process now before you've even picked out a home to buy. Preapproval has two distinct advantages. It shortens the amount of time needed to get your financing set up when you do find a house you want, and it also lets sellers know that you're a more serious buyer.
You can certainly start shopping around for homes while you're going through the preapproval process so that you're working on these two parts simultaneously. But keep in mind that sellers aren't as likely to be impressed with your offer until after you've got an official preapproval letter in hand.
You also don't need to limit yourself to getting preapproved with just one lender. Because you're not agreeing to take out the loan, you can apply for preapproval with as many lenders as you want. You're just getting a commitment from the bank that you're likely to be approved, with certain terms. If you do all of your preapprovals within 45 days, you also won't see as much of an impact on your credit score, because credit rating agency FICO treats all of these mortgage inquiries the same within that time span.
Be aware that your preapproval has a time limit, usually 30 to 60 days. So it's best not to do it until you're absolutely ready to start house shopping.
Consider a Broker
Online comparison shopping sites let you check many lenders quickly, but human mortgage brokers do the same thing. There are some advantages to the latter: Brokers can help you quickly dial in on the best lender for you, given your situation and your mortgage goals. They may be more familiar with underwriting requirements and how each lender works.
But they generally charge a fee for their services. Still, if you're truly time-crunched, opting for a broker may be one of the quickest ways to go.
Track the Process
Getting a mortgage is complicated, and juggling all these balls at once while you're trying to advance through the process quickly is challenging. For instance, if you forget to get back to a lender with one small detail, your application can be held up for weeks.
That's why it's especially important to come up with a system for tracking everything. If you're a digital nerd, you might use a spreadsheet to do this. You can also just write notes on a pad of paper, and store them in a safe place.
Keep track of any dates or times that you've reached out to a lender. You'll also want to record this information whenever a lender reaches out to you, along with what they're requesting. When you send in any information, note down what you sent and when you sent it in, too.
A lot of the mortgage process involves sitting and waiting. But by being as proactive as you can when possible, you can help speed the process along nicely.
Frequently Asked Questions (FAQs)
What questions should you ask when you’re mortgage shopping?
Here are some of the most important questions to ask when you're shopping for mortgages:
- How much do you require for a down payment?
- What is the term (duration) of the loan?
- What is the loan’s annual percentage rate (APR)? Is it a fixed rate or an adjustable rate?
- If it's an adjustable rate, how often does it adjust? Is there a rate cap?
- When does my rate lock in? Is there a fee to lock it in?
- What fees are involved? Can you explain each one in turn?
- What documentation do you need from me to complete the application?
- If you require private mortgage insurance (PMI), how long do I need to pay it?
What should you look for in a mortgage lender?
If you're looking to get a mortgage quickly, responsiveness might be one factor you use in choosing a lender. How quickly they respond to your calls or emails can be an important metric to use.
Otherwise, here are some things to ask when comparing lenders:
- How willing is each lender to waive fees?
- How expensive will your loan be, with all fees and interest over the life of the loan included?
- What sort of ratings and reviews does each lender get on independent websites like Google or Yelp?