How Long it Takes: Mortgage Loan Process Demystified

One of the first questions borrowers ask me when we’re beginning their mortgage application is “how long is this process going to take?” If you’ve wondered the same thing as you consider buying your first home, or your next home, here’s a simple, easy-to-understand rundown of the loan process so you can see about how long it’s going to take.

In general, once you find a house and go under contract to purchase it until closing and getting the keys, it’s usually about 30-45 days. Below I’ll go through what makes up those days, but first, let’s back up to the very beginning, when you decide you’d like to buy a home. You call me and we talk about your goals and come up with a plan. I will fully pre-approve you for a mortgage and you’re ready to begin shopping for a home!

Once you find a home and sign a sales contract, you’ll make an initial deposit on the home, called ‘earnest money,’ which is typically 3 percent of the purchase price. That money is deposited into ‘Escrow’ for safekeeping until your closing. The seller will open escrow and choose a title company that will handle all the legal documents related to your closing.

Due Diligence & Loan Application – 10-12 days

The opening of title and escrow will trigger the due diligence period where we will have you sign your initial loan disclosure package, order the appraisal, inspection, and review any seller disclosures. You will be responsible for paying for your appraisal at this time. The appraisal is the only up-front, out-of-pocket expense you will have until closing. For your mortgage, we will be updating your loan application, if necessary, and collecting current financial documentation to include with the application for submission to the lender.

Tip: You can speed up this step by having all of your documentation ready for us to submit for your loan.

Loan Approval & Underwriting – 10-20 days

Once we have your full loan package assembled, we’ll submit it all to the underwriter. They will review it, provide a conditional loan approval, and reply with a list of conditions – meaning further documentation needed. We will work together to meet all of those conditions, communicate and submit anything additional, and get the loan approved. While this is going on, you will be getting your homeowners insurance set up, which I’m happy to help you with. Once all the conditions are met, we get the blessing from the underwriters that we are “cleared to close.”  We then issue a CD “Closing Disclosure” which has a 3-day waiting period before you can sign your loan docs.

Tip: Address your loan conditions as quickly as possible to speed up this step.

Closing is scheduled! – 3-5  days

Once you are cleared to close we will schedule your closing at your preferred location, either with a notary or at escrow. At closing you will sign all of your loan documents as well as your deed and property documents. You will bring your down payment funds and any other fees to closing.

When you are done signing, we will fund your mortgage loan, record the change of ownership with the local clerk and recorder, and you’ll get your keys! Congratulations homeowner!

Tip: Be ready to pay your down payment and any fees. For budgeting purposes, typically fees will run about 1.5 percent of your purchase price, can be more or less depending on your loan amount. I can give you a more specific figure based on your personal scenario.

Where do delays commonly happen? Hopefully this picture gives you a better understanding of the loan and home buying process and why it takes as long as it does. Here are where I see delays commonly happening:

  • Remember, progress is only being made during business hours and days, no weekends or nights for banks. 😉

  • Often borrowers are slow to get additional documentation so that we can meet all the underwriter’s conditions.

  • There are many parties involved that need to work together, I personally handle coordinating them all and making sure they do their job to ensure timely closings (a perk of using me!!).

  • Escrow and title are slow in submitting initial fees needed to disclose the loan initially.

  • Sometimes underwriting is slow, taking 2-7 days to get conditions back to us.

  • Delays in needing more information once underwritten (i.e., HOA Certifications, Termite Reports etc)

  • Sometimes there are delays in getting loan docs.

If any of these delays happen it can mean a day or two here and there, which ultimately adds up to a longer closing period.

So, there you have it! That’s how a home purchase and mortgage are done! To help you follow along in the process, I’ve created a handy (and pretty ;)) printable PDF that walks you through the entire timeline. Click here to grab it! 

If you have any questions on this process or are ready to dive in yourself, reach out. I’m here to help you! I absolutely love helping my clients get into a home they love, whether it’s the first time or the next time. I look forward to working with you.