Why do mortgages take so long? | Monday Minute

A lot of people ask why it takes so long to get a home loan vs say a car loan.  A car loan, you go to the dealership and within a short period you are driving away, same day with your new vehicle.  But when it comes to home loans, it feels like an unnecessarily long period of time.  Why is that?Well, there are a few reasons for this.

1. Government imposed mortgage rules.  The consumer Financial Protection Bureau added some additional regulations back in 2014.  Certain verifications require longer time periods to document and confirm.  Additionally, certain lending laws require certain timeframes for borrower review that also add to the overall timeline of obtaining a loan.  This includes a 3 day review of the final documents before settlement.  Even if all parties are ready to settle, once final documents are prepared the buyer still has 3 days to review numbers before settling on the home.

2. Appraisal standards and requirements.  Appraisers are supposed to follow certain guidelines and due to these guidelines, the process can take longer.  Additionally, depending on how busy the market is, appraisers may be busy and they have certain timeframes they are allowed to take to complete appraisal reports.

3. Title verifications.  A very important factor and one most buyers don’t realize that is required in obtaining a home mortgage.  The title company has procedures to make sure that the home has “clear title” and that any judgements or liens are cleared on the property before it is transferred to the new buyer.

4. Rigorous underwriting.  The underwriting process is a very intense one, that considers all aspects of the home buyer to make sure they have the income to make the required payments.  Underwriters often need additional documentation while going through the borrowers file to better come to an approval.  Every time the underwriter request new documentation, that can add time to the overall process.

If you are applying for a home mortgage you can help speed up this process by providing everything that the lender requests right away and always being on top of any additional requests throughout the process.  If you have any questions about the home mortgage process or buying a home, give us a call.  We look forward to helping you!