How Long Should You Expect for Home Loan Approval?

Waiting for loan approval can be a very cumbersome task. Depending on the type of loan applied for, the entire approval process could take anywhere from one business day to a month. The exact length of time will also depend on a variety of factors, such as the complexity of the underwriting process, the credit history and risk associated with the borrower, and whether or not the borrower has provided all the necessary documentation to process the loan. Sometimes, the loan approval process can take less than one day, if everything the lender needs is supplied with the application and the credit worthiness of the borrower is excellent. The lender will be able to provide more specific information as to the length of the approval. This "instant" or "quick" approval is becoming less likely since the downfall of the housing market in 2008.

The Process

Lenders have their own approval process which takes time to complete. First, they'll look into the borrower's credit history to determine if they qualify for the particular loan they are applying for. Then, they will verify income and employment through references and bank statements to ensure the borrowers have a job or the means to pay for the loan. Depending on the loan type requested, there may be specific steps to follow in the underwriting process which could lengthen the time it takes to get approved for the loan. 

Documentation to Supply

The lender will need to have proof of identity, your social security number, credit reports, bank statements, pay stubs, and sometimes tax returns. All of this will enable the lender to prove that the borrower's identity so they can move forward with verifying employment and income for the purpose of approving the loan. The lender will usually pull their own credit report rather than allowing the borrowers to supply their own, but a consent to do so will be required. The faster the borrower supplies this documentation to the lender, the faster the loan may be approved.

Why it Takes so Long

Lenders now take the time to verify all the information on the documentation borrower's supply to them, to ensure the borrowers are honest and can handle the payment obligation each month. Verifying the information leads to the reduced likelihood of default or foreclosure.

Be Careful

There are some offers out there, on the Internet especially, which can be extremely misleading. No mortgage is going to be instantly approved, and no mortgage should be advertised as such. Don't fall for gimmicks that seem too good to be true, because in the case of mortgages, they usually are. If anything seems fishy to you, report it to the Better Business Bureau or the Federal Trade Commission. Only apply for a mortgage with a lender you know and trust, such as your local bank. 

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