In today's world with everything at a click of a button, immediate gratification has become the norm. But can securing a mortgage loan work as seamlessly?
Factors calling for a quick mortgage loan
A job transfer may require a rapid relocation.
An existing home might sell more rapidly than expected. While the plan may have been to put the house on the market while looking for the next home to buy, a fast sale can necessitate accelerating the purchase and close on a new home.
Home-buyers may be searching for a home in a specific school district and might want to close rapidly to meet a registration deadline.
While some people sell their home and choose to rent before buying, others don't want to endure the hassle and cost of moving twice -- once into a rental, and again into the "real" home. Pet-owners may worry that their pets won't be welcomed in a rental property and buying a home is the only way to accommodate some pets.
For these and other reasons, home-buyers can find themselves anxious to finalize their mortgage loan rapidly.
3 tips for getting a quick mortgage loan
1. Know your credit report status
Up to 25% of all consumers have an error on their credit report. These errors can negatively impact your credit rating. Worse yet, these mistakes could keep you from getting a mortgage.
Each credit reporting agency allows for one free credit report each year. Take advantage of this option to correct any inaccuracies.
If you spot anything amiss, get these issues straightened out prior to beginning the mortgage loan application process, or simultaneously if time isn't on your side.
2. Have your documentation ready
Anyone who's ever obtained a mortgage can attest to one thing: mortgage lenders like paperwork.
While the paperwork required can vary according to the loan and the lender, certain documents are likely to be necessary most of the time. Get ahead of the game by having these items handy for both you and your spouse or co-borrower, if any:
- W-2 forms for most recent two years
- Tax returns for most recent two years
- Paycheck stubs for most recent two periods
- All bank statements for most recent two months (checking, savings, investment accounts)
- Documentation related to debt, such as auto loans, student loans, or loans for other property
- Driver's license
- Explanation for any extraordinary deposits, such as proceeds from selling your existing home, or a bonus payment, that are reflected in your bank statements
- (Optional) Letter from your employer confirming the likelihood that you will remain employed
- (Optional) Letter from your employer or new employment contract were you are beginning a new position
- (Optional) Letter explaining the reason(s) why you are moving
3. Keep your mortgage lender up-to-date
Another way to get your mortgage loan closed quickly is to be in constant communication with your lender.
Few things can throw a wrench into your quick mortgage loan closing like an unwelcome pop-up surprise. Don't attempt to outsmart your lender by keeping things from him or her. Public records are scoured, verifications of employment are completed, and much, much more.
It's the lender's role to ensure low risk. Life changes happen. Being honest and upfront about these changes is always a best practice.
The mortgage application and approval process
Waiting until you've found the perfect home to start the mortgage process is rarely a good idea. The time to start is as soon as you consider buying or refinancing a home.
Homebuyers with pre-approvals in hand can almost always reduce their loan closing time. Pre-approvals can take anywhere from 1-2 days, up to a week. But you should make up that time, and then some, when it comes to the turn-around time for getting your loan closed.
Related: HSH.com's Guide to Mortgage Preapproval
Once you've found a home, your lender will send you a full loan application package. Most lenders offer electronic signature options today. This not only speeds up the process, but it also saves trees, as most loan application paperwork can average upwards of 40 - 45 pages.
Lenders typically have your loan application package ready for you within 48 hours of receiving your Purchase and Sale Agreement.
Once your lender receives your signatures, along with your income and asset documentation, your loan is prepped for processing and underwriting. These stages can vary significantly from lender to lender. Typical time frames for this phase of the loan process can be anywhere from a few days to a couple of weeks.
During this process your title work is requested, your appraisal is conducted, your homeowners insurance and other necessary items that are required to obtain a mortgage are all secured. Note: your appraisal is often the longest part of the loan process, taking anywhere from one to two weeks, on average.
Timeframe for getting a home loan
In these days of stricter disclosure requirements and longer waiting periods, getting a mortgage is rarely a 10-day process. However, it is very possible to get a loan in less than 30 days.
Being prepared before you start your home search is important, if possible. Following the tips provided can help significantly reduce the time it takes to get a mortgage loan.
Mortgage rates should be better for shorter rate lock periods. When you get a mortgage quickly, there are very few downsides, if any.