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How Long Does Underwriting Take—and Can You Speed It Up?


How long does underwriting take? Underwriting—the process by which mortgage lenders verify your assets, and check your credit scores and tax returns before you get a home loan—can take as little as two to three days. Typically, though, it takes over a week for a loan officer or lender to complete.

Underwriting happens after the down payment is made, but right before you close on a house. That means that the timing of this home loan process can be crucial, particularly if you want to move in by a certain date.

But make no mistake: Underwriting is unavoidable. All loans and loan applications go through an underwriting process before the mortgage lender can promise you the funds for a purchase.

While you might have daily contact with your mortgage officer or bank lender, the underwriting process is long, seemingly mysterious, and potentially stressful.

Sadly, mortgage underwriting is not automated. Here’s why the underwriting process takes so long, and some suggestions on how to speed it up.

What is underwriting?

After the down payment is in place, it’s time for the next step. It would be nice if your loan lender could just stamp you as “pre-approved,” but the process isn’t automated in that way.

Your mortgage officer or loan officer typically reviews the buyers’ tax forms, pay stubs, bankruptcies, debt-to-income (DTI) ratio, liens on any property you own, and other basic documents, before issuing buyers a pre-qualification.

Underwriting for a home loan takes a fine-toothed comb through every form, deposit, and credit report, to ensure your creditworthiness. An underwriter’s job is to make sure you meet the lender’s guidelines, confirming and assessing your DTI and credit.

Most of the mortgage loan process is relatively transparent, but underwriting takes place behind closed doors. Someone at the bank, or a lender, will relay any requests for documents (like more W-2 forms, credit reports, or info related to your self-employed status) or further explanations.

Some borrowers have golden records, while others require a deeper dive, for additional information about your credit history.

What does an underwriter look at?

The specific documents needed for your loan application will vary based on the type of loan you are receiving from your lender or underwriter (an FHA loan, for example, often requires more paperwork). Expect to provide your tax returns, credit score, W-2s, bank statements, and pay stubs as part of mortgage underwriting.

You can also expect to send additional documentation every time an underwriter or lender has a question. For instance, your bank statement might show a recent $2,000 deposit.

You know it’s a birthday gift from your dear grandmother, but the underwriter doesn’t. You will probably have to write a letter of explanation for your lender detailing that it is a gift.

Underwriting can be frustrating, because the questions seem obvious. Don’t worry—many underwriters and lenders find this mortgage loan process frustrating, too.

“The banks also give almost no room for underwriters to make exceptions using their judgment,” says Emily Rees, a former underwriter. “Underwriters are terrified of getting a loan audited and having a bad score, so they frequently will overask for documentation to cover their behinds, rather than stand confident in a decision and moving on.”

How to speed up underwriting

The best way to speed up the process is to make sure your paperwork for the lender or underwriter is complete, which should allow your loan to sail through in as little as two to three days—if you’re lucky, even in a single day.

But if more documents are required—as is true for the vast majority of loans, even for those people who have a perfect credit score—expect to wait at least a week for the underwriter to issue a “conditional approval.”

Although the underwriting process can be frustrating, just know that you’re near the finish line (at least you came up with the down payment). If the underwriter wants only a few additional documents, you should be close to final approval and maybe conditionally approved!

For more smart financial news and advice, head over to MarketWatch.

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