Curve

How to rush your mortgage to the closing table

Gina PogolThe Mortgage Reports Contributor

In this article:

When you can close quickly, there’s less chance of something “going wrong” in your life which can affect your final mortgage approval. To help speed up the closing process:

  • Get your documents in order before applying. For loan approval, you’ll likely need to provide recent pay stubs, W-2s, and bank or investment account statements.
  • Preview your mortgage credit score. Identify any inaccuracies in your credit report that could be impacting your credit score. Remove them before your loan is submitted for underwriting.
  • Avoid life changes while your loan is in process. Don’t quit or change your job, open up new lines of credit, make any large purchases, or do anything that could jeopardize your application.
  • Stay in touch with your lender. Respond quickly to requests for additional paperwork or questions.

Close your mortgage loan faster

There are lots of reasons to close on a home purchase or refinance loan quickly.

When you can close quickly, you can appease an anxious seller who wants to move yesterday. And there’s less chance of something “going wrong” in your life which can affect your final mortgage approval.

Quick closings can also get you access to lower mortgage rates. This is because mortgage rates worsen as the number of days required to close your loan increases. When you can close in 30 days or fewer, you'll often get a lower mortgage rate than if you need 45 days or more.

The major delays in approving a mortgage occur during the underwriting period. However, because mortgage underwriting is fairly standard process, with a little bit of prep work, you can help your underwriting period close quickly.

Here are some tips to help you close on your mortgage more quickly.

Verify your new rate (Sep 24th, 2018)

Get your documents in order before applying

To get a mortgage approved — whether it’s a low-down payment loan via the FHA, a conventional loan with 20 percent down, or a different loan type altogether — you must meet minimum program standards.

These minimum standards include such borrower traits as annual household income, assets in the bank, and credit rating.

During mortgage underwriting, save for streamlined refinance programs, your lender is required to verify this information in writing in order to issue an approval.

No verification, no loan.

It’s common for lenders to request two years of federal income tax returns to support a loan approval if you’re self-employed, on commission, or receive your income from investments. Otherwise, you may just need a recent pay stub and a couple of W-2s.

Since you know you’ll need these documents as part of your loan approval, compile them in advance. This helps you close your mortgage faster.

You’ll also supply the two most recent statements covering your bank, retirement, and investment accounts. You’ll need to show the source of your down payment, and keep copies of transactions related to it — for instance, deposit slips, transfers, and canceled checks, if applicable.

If you’re receiving a down payment gift of cash, for example, you’ll be asked to document that gift precisely. Therefore, do it advance.

Preview your mortgage credit score

Nearly 1-in-4 consumers have an error on their credit report, and they can negatively affect your credit score.

There’s never a good time to find a credit report mistake, but finding one while you mortgage loan’s in underwriting is definitely a bad time to find one.

Check your mortgage credit scores prior to applying for a mortgage loan, if you’re able. Your goal is to identify inaccuracies and to remove them before your loan is submitted into underwriting.

Plus, there’s a secondary benefit.

When you know your credit score, it can be easier to shop for and identify the best mortgage loan for your needs. For example, if your credit score is between 580 and 620, you can be reasonably certain that an FHA-backed mortgage is in your future.

If your credit score exceeds 680, and you plan to make a 10 percent to 20 percent down payment, you’ll likely find the piggyback loan to be your best fit.

Avoid life changes while your loan is in process

Mortgage lender don’t like to approve loans twice, but recent reforms require them to.

The first approval is your initial underwrite. Underwriters verify your income, assets, and credit. The confirm your employment. Once you get approval as a borrower, the property becomes the concern. Your lender orders an appraisal — you may have to pay for it upfront, so be prepared.

Lenders audit most files just prior to closing, reviewing your income, assets, credit, employment, home appraisal, and everything else.

It’s this second approval that buyers and refinancing households sometimes forget, because if there’s been any material change in your application information, the lender pulls your loan from the queue and rewrites it from scratch — closing derailed.

What’s a “material change” to your application? Pretty much anything.

  1. Quitting or changing jobs
  2. Altering the source of your down payment
  3. Applying for a new credit card or increasing balances (don’t buy furniture for your new house yet!)
  4. Missing a payment on any account that reports to credit bureaus
  5. Bouncing a check
  6. Buying a car or anything expensive
  7. Making an unexpected, large deposit to your bank account

Should any of the above events occur, you will slow your loan approval, and could possibly get your loan turned down.

Therefore, if you absolutely must do one of these things, have a conversation with your mortgage lender first. Your lender may have advice on how to move forward with as little disruption to the loan process as possible.

Verify your new rate (Sep 24th, 2018)

Stay in touch with your lender

Another way to close your loan more quickly is to be available.

Mortgage applications almost always trigger requests for more information or documentation, For instance, if someone not on the loan application happens to be a co-owner of your bank account, you’ll need a letter from him or her stating that you have access to the entire account.

If you use income from alimony or child support to qualify, expect to provide a copy of your divorce decree and proof that you receive the money regularly — canceled checks or deposit images showing the checks going into your account, perhaps. And if your credit report shows you co-signing for anyone, you’ll need proof that the person you co-signed for has been making his or her payments on time.

It’s a fact of mortgage lending.

So, the best thing you can do when your loan is in-process is to remain available and accessible to your lender.

Mortgage underwriters can’t do their jobs without you so borrowers who respond quickly to requests for additional paperwork find themselves getting priority treatment from the bank.

Borrowers who disappear tend to find their loan on the bottom of the pile.

What are today’s mortgage rates?

Great mortgage lenders will guide you through the home approval process and will help you to close on your loan more quickly. The above advice will help, too.

Get today’s live mortgage rates now. Your social security number is not required to get started, and all quotes come with access to your live mortgage credit scores.

Verify your new rate (Sep 24th, 2018)