How long does the loan process take?

The length of time between when you apply for a mortgage and when you get the funds for your home can vary widely depending on many factors.

For purchases, generally sales contracts are written with a closing date set about 30 days out. Most purchase loans can be completed in 30 days. Often, if all of you numbers are good, such as credit score, debt-to-income, loan-to-value, etc., purchase loans can be completed much faster. Conversely, if your numbers and documentation are not so good, these loans can take longer.

There are unforeseen problems that can arise with purchase transactions and delay the process. If the home inspector finds problems with the property that is being purchased the lender may require the repairs to be made before the loan can close. the appraisal can also come under review by the lender and have to be adjusted by the appraiser to deal with certain objections the lender may have with the appraisal.

Refinance transactions can typically close faster than a purchase transaction. In a purchase transaction you must deal with the buyer and seller and their agents and the involved parties. In a refinance transaction it is you, your broker, lender, closing agent and appraiser.

There is definitely no set time-line as to how long purchase transactions and refinance transactions take from start to finish. However, refinance transactions are normally, considerably quicker than purchase transaction. There are many different variables that go into how long a loan takes to close. Refinances can be done in ideal situation as quickly as a couple of days but normally take anywhere from 10-14 days on average. Purchase transactions again can sometimes be done very quickly, however 30 days is the normal time of a purchase due to the sales contract.

For refinance transactions here are just a few examples of items that can cause delays:
* appraiser being backed up with a lot of business
* Appraiser not being able to find a convenient time for you to be home for the appraiser to come out and appraise the home
* Lender is not satisfied with the appraisal and requires a new one to be completed
* Appraised value coming in lower than expected and this could change the entire parameters of the loan and cause a change in lender
* Something showing up on title that was not known (such as a judgment, lien, etc...)
* Lender and/or Title Company being backed up with closings and not being able to schedule your closing for a few extra days
* End of a month is typically a busy time for lenders and this can cause delays if you are trying to close at the end of a month
* Your loan is randomly selected for a quality assurance audit before it can close
* Problem with the loan and the underwriter catches something not previously discovered and needs extra documentation
* Technology problems (computers go down, information lost, fax problems, etc...)
* Fraudulent information by the borrower is discovered in a file
* More information is requested by the underwriter (such as Bankruptcy papers, divorce decree, Verification of Employment, etc...)
* Application for a mortgage is not accepted as is by the lender and a counter-offer is issued
* Consumer changes loan information (such as home loan program, term of loan, type of loan, etc...)

For Purchase transactions most of the same items as in refinances can cause delays and additionally these can cause delays also:
* Seller backs out of the contract
* Purchase agreement states loan can not close until a certain date
* Seller and buyer take weeks or even longer to agree upon purchase price
* Appraisal does not come in at purchase agreement price and seller won't lower sale price
* Title company is slow or gets changed
* Problems with title not being clear
* Realtor not on top of things or leaves to go out of town and no one else can help you with the file until the Realtor gets back
* Changes or addendum's to purchase agreement
* Delays in Home Inspection
* Problems with home inspection and repair work that needs to be done
* FHA financing is being used and seller refuses to make appropriate repairs or takes a long time to complete them
* FHA financing generally takes longer than conventional financing
* Credit issues need to be cleared up before the bank will allow the financing
* Down payment and/or closing cost money(s) are not seasoned
* Timing for seller/buyer and the sellers and buyers of their homes does not work out well
* Needing to wait for down-payment money to come in from the sale of your current home
* Problems arise in the "11th hour" and closing is delayed

In cases where the subject property of the purchase or refinance transaction is a cooperative, the financing process can take significantly longer. Lending banks require that the coop management and coop board to provide certain signed documents prior to settlement. Depending on the efficiency of the coop management, this extra step can add weeks to the mortgage process.

If you are refinancing rather than purchasing do not forget the Right of Rescission period. This is a federally mandated three day waiting period between the time your refinance closes and when it actually funds.

The loan process will be greatly affected by the experience of your mortgage broker.

» DISCLAIMER: The information contained in this article on 'How long does the loan process take?' is a collection of contributions by licensed mortgage professionals and is not the opinion of Broker Outpost LLC. Always consult a licensed professional before applying for a mortgage.