7 Tips to Close Your Mortgage Faster
Be ready with financial information and ask questions immediately to avoid delays.
Closing timelines are tightening, but aspiring homeowners have to work hard to ensure a quick turnaround.(Getty Images)
When you’re looking to buy the perfect home in a hot real estate market, timing is everything. You certainly don’t want to lose out on a home because you can’t get to the closing table quickly enough for the seller.
Unfortunately, some things are out of your control. Especially when it comes to your mortgage approval, which typically includes a property appraisal, inspection and deeper dive into your personal financial history, deadlines can come and go.
The last thing you or your lender want is for you to lose out on the perfect home purchase because your mortgage underwriting process took too long. Fortunately, there are a growing number of ways for you to help move the loan approval process along and hopefully keep you on time with your preferred closing date.
In a study of mortgage purchase timelines over 14 months released this week, online loan marketplace LendingTree reports the median amount of time it took from the first point of contact during the mortgage shopping phase to closing on a purchase decreased by seven days over the course of the year. In addition, LendingTree reports a 19 percent increase in the number of loans closed within 30 days and a 27 percent increase in mortgages closed within 31 to 60 days.
The tightening of close times are certainly encouraging for homebuyers who need to move at a steady pace in order to beat out competing buyers with a tempting offer. Still, buyers should expect the mortgage process to take some time and require a good amount of their attention. While closing in less than 30 days is possible, it’s not yet the norm.
The average number of days to close for home purchase loans in August was 43 days, according to mortgage software provider Ellie Mae’s monthly Origination Insight Report.
One detail many experts point to as a reason the mortgage approval process lags is the industry has been relatively slow to adopt new technologies, though the tech world is now infiltrating lender practices and the platforms they use.
“The real estate mortgage vertical is one of the last to offer the full end-to-end search and transaction experience. Most other verticals now offer that – whether it's travel or lodging or airline tickets or taxi cabs. … You have the ability to look and then to buy,” says Rajesh Bhat, CEO and co-founder of Roostify, a mortgage technology company that provides an automated platform for lenders. “Obviously it’s not that simple when it comes to buying a home, but giving the consumer the ability to jump from one of these solutions into the mortgage experience is important.”
Technology can’t do it all, however. Here are seven things you can do to cut the amount of time it takes for your mortgage to close.
Have a list of questions ready. As you shop around and examine lender options, you should be prepared with questions to ask about loan programs available to you, information needed to start the preapproval process and, of course, potential timeline.
“I would ask the question of what are your typical turn[around] times, how long are your [interest] rate locks?” says Sam Mischner, head of mortgage at LendingTree.
If the lender's average time to close is upwards of 90 days, your mortgage approval could be seen as a liability with a seller. You still may feel most confident moving forward with a slower lender’s mortgage options, but keep in mind that time is a factor you’ll have to deal with in your purchase offer and negotiations with a home seller.
The rate lock, which sets a specific interest rate for your loan, good for as long as the lock is in place regardless of what mortgage rates do in the interim, is also important. If you don’t expect to close within 30 days but the rate lock is for 30 days, you’ll have to pay to extend the lock. Factor these costs in as you weigh your lender options.
Pull together your financial information. The best way to get the mortgage process moving on the right foot is to have all your financial information on hand when you apply for preapproval.
Jason Bateman, head of Redfin Mortgage, the lender subsidiary of the full-service real estate brokerage currently located in Texas and expanding to other Redfin markets, recommends you “go ahead and get preapproved” before you begin the house hunting process.
Not only will you better determine the price range you can afford, but you’ve provided the all the necessary information so the “only thing that’s left are property-related matters,” Bateman says.
Make informed budget decisions. By being preapproved for a mortgage, you know the maximum amount you can spend, but chances are you won’t actually be able to afford that peak price when you break down monthly costs.
In addition to a mortgage preapproval, you should determine how much you can afford in monthly payments and your own personal maximum budget based on your own expenses. Knowing the reality of what’s affordable to you from the start will help keep you from wasting time touring homes that ultimately would be too much for you to take on.
“It will cut down a little on the heartache,” Bateman says.
Make a confident offer on a house. When you do find the house you want to purchase, work with your real estate agent to craft an offer that is appealing to the seller and can show you’re serious as a buyer.
“You want to make yourself as competitive as possible, especially in a hot market,” Mischner says.
What to Do If You Are Turned Down for a Mortgage
Take advantage of digital options. More lenders are turning to online and automated options for receiving financial information, accepting loan applications and even communicating with clients’ banks to confirm details and streamline the mortgage process.
Opting to allow your lender to contact your bank directly to verify your financial information or choosing to e-sign a document can help cut out time previously created by a lack of technological assistance.
“If you can look at shaving your closing time frame by several days, by a week or two by using one of these solutions, there’s certainly some benefit to doing so,” Bhat says.
Ask when you don’t know. With lenders embracing new technology at increasing rates, automation is helping things move quicker, but that also means you’re less likely to speak with a person directly unless you initiate it.
Mischner stresses that borrowers can still get all the individual help they may want, but now they have to ask for it: “It’s important to know that if you need help, you have to raise your hand.”
Because you should never sign on to any financial agreement without fully understanding the process, ask questions as soon as you have them to avoid a delay further down the line. Questions are expected in the mortgage approval process, so you should never feel embarrassed to ask.
Be on call. As the loan officer is working on your loan application, you’ll likely receive a request for a specific document or for you to confirm a detail. The best way to speed up your approval is to answer immediately.
Mischner points out that underwriters and loan officers are dealing with many pending loans at a time. If you’re able to answer any questions before they’ve moved onto another loan on the to-do list, things can move quicker. “When they’re working on your file and they reach out for something, make sure you get it back to them as quickly as possible,” he says.