Welcome back to the first time homebuyer series! We took some time off to launch or new website and blog! With the launch our website will strictly be used as a tool for establishing connection between our clients and us. The blog is a separate entity and will allow us to focus on putting out more and more valuable content for the audience! Continuing on in the series we need to talk about the mortgage timeline.
Questions about the mortgage timeline are common. Establishing a realistic expectation for the mortgage timeline is important and will help ease the burden of what is commonly thought of as a stressful time in the process. Before we dive in completely, lets review two imperative steps that should/must be complete by the time the mortgage process is started in order to maintain a great, concise timeline.
- Pre-Approval: Having a pre-approval letter speeds up the entire lending process because the appraisal can be ordered immediately and your loan application can be processed without delay. Some experts have estimated with a pre-approval, closing can be shortened by two to three weeks.
- Find a home: This step obviously has to be completed in order to apply for a mortgage but still worth mentioning. Once you have found a home you like, your Realtor will assist you in making an offer by writing a contract and then negotiating the terms of the sale.
With these two steps complete the mortgage timeline can be expedited. Overall you should expect the process take and average of 30 days or so. Lets take a look.
Day 1: Loan Application Day
Once the aforementioned contract has been accepted, you will complete the loan application. If you’re ready, you can get your interest rate locked in at this time. Your loan is then assigned to a loan processor.
Days 2-3: Document Collection
For your loan to proceed quickly, any documents requested at your loan application will need to be submitted as quickly as possible, to determine program options. If necessary, the cash needed to close may also be required.
Days 4-9: Appraisal Inspection
At this point, if you choose, you may obtain a home inspection. (Which we highly recommend) Once you are satisfied, we will order an appraisal to determine value. At times it may be necessary to obtain a well, septic, and water tests. A mortgage survey may also be required.
Days 10-14: Approval
After your processor receives the necessary paper work, he/she submits your loan to an underwriter for approval. This can take up to a week.
Days 15-17: Conditional Approval
Sometimes the underwriter needs a little more documentation and will ask for it when he/she delivers the conditional approval. This is a normal part of the loan process.
Days 18-20: Obtain Homeowners’ Insurance
Homeowners’ insurance is a very important step in the mortgage timeline because your lender requires it. Without evidence of homeowners’ insurance, you can’t close on your new home. During these 2 days, you should select an insurance company and submit requested paperwork to them. Remember, the first year premium must be paid in full prior to, or at closing. There will be a separate blog entry on this topic soon!
Days 20-22: Clear to close
Once the underwriter is satisfied that all the conditions have been met and has reviewed the requested documents, he/she will deliver a “Clear to Close”.
Days 23-25: Closing Disclosure (CD) Settlement Statement
The Title Company will prepare the CD statement after you have received the “Clear to Close”. This statement will give the final amount that you will either need to bring to closing or will receive back from any earnest money that may have been paid.
Days 26 -30: Closing
Closing cannot occur until 3 business days AFTER receiving the CD. It takes approximately on hour to sign all the documents and then the home becomes yours! Your first mortgage payment will be due on the first of the month, one full month after your closing date.
This is the timeline! Check back for our next topic, “Understanding your mortgage options”
Are you looking to buy a house and need a mortgage? We would love to help! Please leave a comment or Click Here and find the most convenient way for you to contact us.