Underwriting—the process by which mortgage lenders verify your assets, check your credit scores, and review your tax returns before they can approve 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 the process.
The underwriting process happens after the down payment is made, but before you close on a house. That means that the timing of this home loan process can be crucial, particularly if you are hoping to move in by a certain date.
But make no mistake: The underwriting process 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 will still be long, seemingly mysterious, and potentially stressful.
What to know about the underwriting process timeline
The mortgage underwriting is not automated. You’ll be given a checklist of documentation that you need to provide. How quickly you are able to provide it can affect the timeline. Here’s everything to know about the underwriting process timeline, plus why the underwriting process takes so long, and some suggestions on how to speed it up.
What are the steps in the underwriting process?
It would be nice if your loan lender could just stamp you as “pre-approved,” but that’s not how it works. Paying the down payment is the first step. Once you’ve made that payment, it’s time to gather up and submit your documentation.
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 approach to 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 worthiness.
Most of the mortgage loan process is relatively transparent, but the underwriting process takes place behind closed doors. Some borrowers have golden records, while others require a deeper dive, for additional information about your credit history. Even after you submit your documentation, it’s possible that someone at the bank, or a lender, will make a request to you for additional documents or further explanations.
What are the documents an underwriter looks 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 (anFHA 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 will want to understand where that money came from. You will probably have to write a letter of explanation for your lender, detailing that it was a gift.
Underwriting can be frustrating, because the answers to the questions may seem obvious to you. Don’t take it personally—many underwriters and lenders find this mortgage loan process frustrating, too, but this is a requirement of their job.
“The banks also give almost no room for underwriters to make exceptions using their judgment,” saysEmily 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 long does the underwriting process take and how to speed up underwriting?
Wondering how long loan underwriting takes and if you can help move it along? The best way to speed up the process is to make sure your paperwork for the lender or underwriter is complete. Complete paperwork and good documentation will 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 happens for the vast majority of loans, even for 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 (kudos on making that down payment!). If the underwriter wants only a few additional documents, you should be close to final approval and maybe conditionally approved!
