The Loan Process Timeline
Buying a home is an exciting process, but it can also be overwhelming and confusing. One of the biggest sources of confusion: What will happen in the time between your offer getting accepted and actually closing on the house? How long does each step take? How can you know what to expect from day to day—and prepare for it appropriately? Here's a breakdown of what you can expect during every stage of a typical home buying process.
Getting a pre-approval (20 minutes)
A pre-approval is the next step after getting prequalified in the home loan process. You'll submit some financial information to your lender and they'll give you an answer on whether or not they think you can get approved for a certain amount of money.
Here's what happens when you get a pre-approval:
- Submit your application and documentation to the lender
- The lender pulls your credit report(s), analyzes them for accuracy, then determines if there are any items on your report that could impact their decision to lend money to you (e.g., late payments). If there are issues, they may recommend ways for you to improve such as paying down debt or increasing your credit score by making timely payments on all accounts over time
- Once cleared by the underwriting department at the bank or credit union (if applicable), it’s determined whether or not they will offer any special incentives such as no closing costs in exchange for setting up automatic payments through direct deposit
Submitting your loan application (10 minutes)
Once you’ve decided on a loan, it’s time to apply. You will need to provide information about yourself and your finances. This includes:
- Amount of money you want to borrow
- Interest rate that you are willing to pay on your debt
- Type of mortgage that best fits your needs (fixed-rate or adjustable)
The lender will also ask for information about the property that you want to buy. This may include details about its location, size, condition and value. They will also want to know how much money down payment or equity in the home is required for the purchase price.
Initial processing of your loan (1-3 days)
Once you’ve applied for your loan, the lender will need to verify your income and assets. The lender will also verify your credit, employment status and property information. This can take anywhere from one day to three days depending on how quickly they are able to receive all of this information.
Appraisal (2 weeks)
You can expect the appraisal to take up to two weeks, but it can take longer if the property is in a remote area or in a flood zone. It's also possible for an appraisal to take a few days longer than expected if there are issues with the house that need to be repaired before it can be appraised.
Underwriting (3-5 days)
The underwriting process is the next step in your mortgage application. During this time, the lender will review your application and determine if you are eligible for a loan.
During this time, the lender will verify your income, assets, debts, and credit history to make sure that you have enough income to repay the loan and that you have sufficient collateral (your home) to secure it. They'll also check whether there are any other loans on your credit report besides those which helped get them approved for this one.
Preparing for closing and funding (3-5 days)
During the final days of your loan process, it's important to make sure all the necessary documents are in order. This includes having your loan documents signed and notarized, as well as any other required forms. If you are moving into a new home, it is also recommended contacting your utility companies to set up services (electricity, water, cable TV).
You should also have any funds needed for closing ready. This includes paying off any existing mortgage balance on your old property and paying off any additional fees associated with purchasing a new home (such as settlement fees). Lastly, make sure everyone involved in the transaction has access to their personal information like bank accounts and credit cards numbers so that they can be paid once everything goes through properly.
Closing day (1-2 hours)
The closing day is the final step in the home loan process, when all parties sign documents that transfer ownership of your home from seller to borrower. The closing date will be on or around the funding date, which is typically two to three business days after you've been approved for your loan.
If you haven't yet received final approval, then it'll happen after final approval comes through. The timeline may vary depending on the lender's policies, what documents you need to submit, or if you have an existing relationship with them.
Also keep in mind that even though your application is approved and ready to process, it can take up to 30 days for a title company to finish all the paperwork needed before closing day.
As you can see, it's important to have some patience when going through your home loan process. Having all of this information in one place should help you know what steps come next so that nothing will take you by surprise! If anything doesn't seem normal or goes wrong along the way (such as being asked to provide more documentation), don't hesitate to reach out and ask questions.