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Why does the loan process take so long?
Although the loan process can take a long time to complete, it is important to know that there is a lot of work that goes into acquiring funds for a new mortgage loan. This is a list and description of some of the reasons for the loan process to take as long as it does.
One reason the loan process can take a long time is because of the loan officer and/or the mortgage company you choose. If the loan officer is not experienced in the type of loan you need, he or she can make mistakes that can delay funding of the loan. If the mortgage company does not have enough processors, does not train their loan officers completely, is not organized and efficient or is not capable of doing electronic submission of your loan, the process will take longer.
If you are refinancing do not forget about the Right of Rescission. This is a three day waiting period between the time you sign closing documents until the loan actually funds. This federally mandated waiting period is meant to protect home owners from unscrupulous loan officers by giving you a chance to "call off" the entire loan if you feel uncomfortable with your new mortgage.
When you decide to take the step to refinance your home loan, your loan officer will talk with you about getting your home appraised. The biggest mistake people can make is delaying the inspection. Getting an appraisal done is one of the most crucial parts of the loan process. Delaying the inspection to clean or make minor repairs will make the loan process longer than it needs to be.
Sometimes, your loan officer experiences delays with trying to obtain verification information. Your loan officer will usually need to verify employment for most borrowers and if they are unable to talk with the person at your employer who handles these verifications then it can delay your mortgage loan process. Also, when your mortgage history or rental history does not report to a credit bureau, many times this can be very time consuming trying to obtain a mortgage history or rental history. Some lenders take up to 30 days to provide a Verification of Mortgage and some landlords are next to impossible to get a hold of to verify a rental history. These are a couple of the reasons why your home loan can take longer than normal.
With a new home purchase, there are thirteen entities involved with your transaction. These include your real estate broker or agent, escrow, title, appraisal, etc. Each of these entities must keep in compliance with specific rules and laws. Because each movement in your mortgage transaction is affected by all dynamics of the process, the timing of each process can have an affect on the over-all timing of final funding.
A Good mortgage broker can help speed up the process of closing a loan.
Another factor that can extend the process is the availability and cooperation of the home owner. In most mortgage transactions an appraisal is needed. If the appraiser is unable to contact you to make an appointment, or if you are not available to let them into the house this can extend the process.
The mortgage loan process is not like any other loan that you apply for because buying a home is a big investment for the borrower and the Lender. The Lender needs time to make sure the borrower is credit worthy and that the collateral is sufficient for the lender to recoup their investment in case of default of the borrower. Depending on the lender's verification guidelines, documents needed, and each party's timeliness that is involved in the transaction the process can take a very long time in the borrowers eyes.
» DISCLAIMER: The information contained in this article on 'Why does the loan process take so long?' 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.
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