The rate is negotiated. The closing costs are settled. The mortgage company has all of my paperwork. When is this process going to be complete? Why can’t my loan close this week?
These questions are asked many times on a daily basis throughout the country. Whether your house is located locally in the Bryan County area or in a non-local market, one thing remains constant: The mortgage process can seem to drag on forever. Why is this?
One of the biggest reasons for this is the number of people that are involved with any loan. On any certain transaction, this number could range from six to 15, depending on the specifics of the loan. For example, if there is flood insurance required on the house, a third-party flood-insurance agency most likely will be required to certify the minimum requirements for the flood insurance. Although this process doesn’t take long, it does add another layer to the process.
Initially, the originator is the individual who begins the process by taking the application. Once the initial interview is conducted, the processor will input the information into an online automated system in order to receive a preapproval.
Once the prequalification is done, the required disclosures are printed so the document signing can take place. During this interview, pay stubs, bank statements and W2 forms most likely are gathered for further analysis by the underwriting department.
At this point, the originator or processor submits the paperwork so it can be underwritten. This is done in order for the lending company to take a closer look at the income documentation and issue the formal conditional approval or denial based on the findings. Under normal circumstances, this also is when the appraisal and title work would be ordered.
At this juncture, the underwriter, appraiser, appraisal-management company and attorney are thrown into the communication mix.
It goes without saying that in order for the process to run smoothly, these people have to work together in a somewhat harmonious fashion. When people are looking to refinance or purchase homes, they are not just selecting mortgage companies, they are selecting a nucleus of people that come together in order to make these transactions possible.
With the collaboration from all of these individuals, the best one can hope for is about a 30-day turn time. This is, of course, assuming the process runs smoothly. In the event that issues such as appraisal problems arise, this process could be prolonged up to the 45- or 60-day mark.
Another issue that seems to be prevalent within the mortgage industry is something called “underwriting turn times.” Whenever we are in a declining rate environment, loan volume tends to increase, which causes underwriters to fall behind on analyzing the incoming files. Under a typical volume increase, turn times will be delayed around two to four weeks, which would be a huge increase from the normal two to five business days.
Although there are many variables that can cause delays, having a good relationship with your mortgage representative significantly will ease the emotional stress caused by the process.
Effective communication always will work in favor of the desired outcome for any given situation, especially when obtaining a home loan.
The originator is the coordinator who has to make all of the pieces fit together. The client depends on that person to relay information so they can stay well-informed about where the process is headed and how long it’s going to take to get there.
Delays always will be frustrating, but not being informed about these temporary hurdles only will compound the situation.
Barr is a mortgage broker with First Carolina Mortgage of Richmond Hill. Visit fcmloan.com or email firstname.lastname@example.org.