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How Fast Can a Lender Approve and Fund Your New Mortgage?

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A new mortgage can close in as little as 10 days. But most will take a little longer. How long? That depends upon a few things but let’s go through how quickly a loan can get funded from application all the way through closing. Some things you can control and some you can’t.

The first thing to consider is what your automated underwriting ‘findings’ say. The automated underwriting system, or AUS, is how mortgage loans are digitally approved. Well, not exactly approved, but the AUS provides the mortgage company with a road map providing instructions on how to get the loan across the goal line.

If the AUS is relatively clean, it can close more quickly than one that might need a little elbow grease. A ‘clean’ approval means there are just a few things that need to be documented for the lender. Such a report indicates the credit scores are strong, debt ratios are well in line and there’s a solid down payment. In this situation, you’ll need very little in terms of documentation. If there are some things that need to be addressed a little further, the approval time might add a few more days.

Second, whether or not you need a full appraisal will indicate how soon you can close. The lender might only need an internal review of the value of the home. On the other hand, if the loan requires a full appraisal with photos and four or more recent sales of similar properties in the area, that will take a bit longer. The appraiser has to physically visit the property, take some measurements, get a glance on the overall condition of the home and complete the report. A full appraisal takes some time, depending primarily on current market activity and the current workload of the appraiser’s schedule.

A title report will also take some time but can also be completed in just a few days. You’ll get a preliminary title report initially and then a few days later the completed title report will be delivered.

That’s pretty much it for third party tasks. The rest is up to you. You’ll be asked for some documentation and depending upon the AUS findings, you can expect to provide maybe a recent paycheck stub or your most recent W2. Some may learn they also need to provide two years of tax returns along with the most recent paycheck stubs covering a 30 day period. Whatever is being asked for, provide as soon as you’re able. You don’t want to be the holdup for your own closing.

Written by David Reed for Copyright © 2023 Realty Times All Rights Reserved. Reed is from Austin, Texas and is the author of The Real Estate Investor’s Guide to Financing, Your Guide to VA Loans and Decoding the New Mortgage Market. A Senior Loan Officer and Mortgage Executive for more than 20 years, he has also appeared on CNN, CNBC, Fox Business, Fox and Friends and the Today In New York show.