Accelerate Your Purchase Loan Approval For A “Quick Close”
Need a "quick close"? You're not alone.
As the housing market heats up, reports of multiple-offer situations are more common nationwide. Homes are getting bid up in markets such as San Francisco, California and Phoenix, Arizona where even homes in foreclosure have generated bidding wars.
Not everyone can be the high bidder, though, so home buyers have taken to sweetening their deals another way -- by trying to close quickly. Home sellers may prefer buyers who can close within 30 days as compared to a buyer who requires 60 days or more.
If you plan to close quickly on your next home and you're using a mortgage, there are some basic guidelines you can follow to help your loan get approved and closed as quickly as possible.
Average Purchase Closing Time Rising From 2012
It's getting hard to close on a purchase loan quickly.
According to mortgage-origination software provider Ellie Mae, the average time required to process, approve and fund a purchase mortgage is up 12% since last March. Consider this comparison :
- March 2012 : 42 days to close a purchase mortgage
- February 2013 : 47 days to close a purchase mortgage
There are two key reasons for the processing days increase, and each is likely to subsist.
First, mortgage rates are low. Low mortgage rates have reduced the costs of homeownership nationwide, which has given many would-be renters reason to be buyers. There is a newfound demand for homes at the first-time buyer level and most purchases of this type use mortgage financing.
Purchase loan applications are at a multi-year high.
And, second, mortgage lenders underwrite home loans differently today as compared to last year. Government regulation requires for each home loan application to be reviewed for completeness and suitability. It's work that was always required but under today's new rules, the tests require more additional time.
An underwriter used to work as many as 10 purchase applications in a day. Today, he may touch as few as two. This slows down the underwriting process overall, contributing to longer purchase turn times.
Through 2013 and 2014, purchase approval times are expected to remain high.
Get Your Purchase Loan Approved More Quickly
For buyers in need of a quick closing, there are some factors which are beyond your control. For example, you cannot control how fast an appraisal is performed because the appraisal requires the cooperation of the seller; or how fast a title search is performed by a title company.
However, there are steps you can follow to make sure your loan is approved as fast as humanly possible. Step one is to be prepared.
Know Your Paperwork Requirements
It's no secret. Mortgage lenders like paperwork. When you're buying a home, therefore, be prepared with the most commonly-required verification documents. This can include W-2 statements and federal tax returns from the last 2 years; your two most recent paystubs; and your last two bank statements. You should also have a copy of your drivers license handy, as well as the social security numbers of everyone whose name will be listed on the mortgage.
Furthermore, if you know you have a unique credit situation such as a recent short sale or foreclosure; child support or alimony payments; or gift funds from a relative, have the relevant, related documentation ready.
Gathering paperwork can be the most time-consuming step in the mortgage approval process. You know you're going to need the documents. Consider scanning them and having them ready for your lender. This can save days off your approval and help you reach financing contingency dates more quickly.
Share Everything With Your Lender
Be honest and open with your lender -- even if you worry that what you share may harm your approval. There are two reasons for this.
The first reason is that withholding information from your mortgage application can constitute fraud which is a far worse outcome than not getting mortgage approved. The second reason is that your mortgage lender will usually uncover what you're not sharing anyway.
As part of the mortgage approval process, a credit check is performed and various "occupancy tests" are conducted by an underwriter. Furthermore, employers are contacted to verify job status and public records are sometimes checked as part of the approval.
There are a bevy of mortgage programs available for today's home buyers -- from large-downpayment to small-downpayment to no downpayment at all. The more information you share with your lender, the more equipped he'll be to help you get to closing quickly.
Use Pre-Approvals To Speed Closing Time
Mortgage pre-approvals are among the most under-used tools to speed a closing. Home buyers with pre-approvals in-hand at the time of offer can typically reduce closing times by one week or more. It's because of the role a pre-approval plays to a lender.
Mortgage pre-approvals are "dry runs"; approvals based on an expected set of loan criteria which will eventually go to closing. For the pre-approval process, a lender will take a complete loan application which includes income and asset verification, as well as notes on specific loan traits such as credit scores, child support payments, personal loans, the availability of a co-signer, and more.
The only item missing from a pre-approval is an actual property address. To compensate, lenders use dummy information based on probable loan data including a sample purchase price, a sample real estate tax bill, and a sample homeowners insurance policy and/or homeowners association assessment, where applicable.
With their loan "pre-approved", buyers can often move immediately to underwriting upon writing a contract. This step can also save one week or more in the mortgage approval process.
Buyers : Get Pre-Approved Here
For today's home buyers, pre-approvals can speed the loan approval process and get you to closing quicker. The average purchase closing time of 47 days can be too long to be competitive in the current, improving market for homes.
See how much home for which you'll qualify, and get started with a pre-approval. The steps are quick and no cost. You can do it here online.