Chicago, IL · Member since 2015 · 414 posts · 94 votes
I’m trying to figure out why getting a loan takes so long. Can someone please explain to me what happens behind the scenes? My lender told me that we can expect ~45 days between closing and when I own the home. What happens in that time that takes 45 days? Getting pre-approved took a day. If they already qualified me, isn’t it just a matter of performing an appraisal, then transferring the deed to me, cutting a check to the owner, and giving me a mortgage?
It takes so long because the loan processor will ask you for papers, forget that you gave them and ask again then loose them, ask you again then go on vacation for a week, then get laid off and you will start with a new loan processor who will ask for the same papers yet again.
The bank has to check out a lot of things about the buyer(s) and for as much as this is the electronic age, paper will never go away and the processing stages involve more than just one persons ok.
The copies of your W2 (verify employment and income), your bank statements (verify balances), copies of your tax returns (verify, verify, verify income), credit cards (verify debt), credit reporting, if you have any mortgages those statement copies are also verified with those lenders and it's part of your debt check.
Although you gave this up for them to qualify you, it wasn't the deep dive into all your history.
Think about all your documents going to underwriting who has to verify all this information and ensure that the financing they are about to lend is not a risk to them.
When I was going through my HELOC process, there was a three day wait to verify my employment. They called on a Friday. Well guess what? The company didn't respond until Tuesday of the next week.
It's all dependent on the individuals involved and the urgency to them to get your information verified. At least it's within the 30-45 day time period and not some arbitrary number of days/months.
I don't know about order of things that happen and some may just be at the same time but:
Appraisal
Survey (if a certified copy is not available)
Title
Flood Certification
All the other documentation about the buyer and the verification process.
And then if there is something missed that is a back and forth between inter-departments (processor and underwriting) or you and the lender.
I kept following up with my agent and lender to find out what was going on when I thought a reasonable amount of time had elapsed based on what my agent and lender told me.
Even after the loan is approved, they still do a verification check on employment. At least that was my experience. They wanted to make sure I was still employed from the time the process started to when they approved the loan.
It takes so long because the loan processor will ask you for papers, forget that you gave them and ask again then loose them, ask you again then go on vacation for a week, then get laid off and you will start with a new loan processor who will ask for the same papers yet again.
It takes so long because the loan processor will ask you for papers, forget that you gave them and ask again then loose them, ask you again then go on vacation for a week, then get laid off and you will start with a new loan processor who will ask for the same papers yet again.
I hate to say it but this is partly the real answer. Plus they aren't just making a mess of your loan, they are messing up dozens of loans at the same time.
It a team of people working together to get a loan done and like in any job there are 1 or 2 hotshots and 5 anchors slowing everything down.
Also it depends on the loan type, lining up a conventional loan and MLS purchase at the same time seems to be the absolute hardest way to set up financing.
Another story in the "s--t happens category". I was selling a flip to a buyer using a Rural Development loan and the person in charge at USDA died during the process. It took two weeks for them to figure out the deceased's workload and delegate it to other offices.
If you go through a process to have yourself pre-underwritten for a mortgage, you can close in 2 weeks. It is the underwriting process that takes the most time...but if you do that ahead of time, that cuts out a lot of the time. Not every bank offers this, but some do, it also costs more money to do it.
Does buying an off-market deal speed up the process? Why?
not really, I wrote that badly. If you're lining up financing and purchase at the same time, the wait time is more painful. if you already own the house and then you want to line up a loan then things can go quicker or at least you'll be cash-flowing while you're waiting.
1. find a great lending team.
2. Have your paperwork clean and ready to deploy (I have ALL my documents digitized and cloud saved so anytime a lender needs something they have it in an email inside of 10 minutes)
3. Stay on top of people. For me it seems that loans take longer when I'm more relaxed about it. When I call every day, things get done. Be a pleasant and respectful pest.
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