A loan is required if you wish to buy a home or else owning a home may just be a dream. With this follows the next question how to get a fully approved loan and how long will this procedure of approval take.
Here are a few factors that determine how long it will take:
- The mortgage type you applied for and the property for that you seek finance
- The timeline standard that a lender uses in mortgage application processing
- The documentation and application you handed to the lender
With all these, the timeline may be from few hours to few days, especially if your documentation and mortgage application is in order.
It is best to avail a pre-approval mortgage before initiating the house hunting process. This means all the speed breaks and hiccups are handled in advance.
Pre-approval refers to calculations that ratio between the earned amount and the debt you will get on the property mortgage. Once a lender is aware that you are able to manage easily the debt with your earnings, they will give you a pre-approval letter guaranteeing 60 to 120 days interest rate. Yet, you should submit with the application:
- Photo identification
- Proof of Income
- Proof of Assets
- Proof of Liabilities
- Account Numbers
- Proof of Down Payment
- Lawyer Information
Conversely, if you identified a perfect home in your imaginable location, fitting your price, size and layout, but cannot buy without a loan? Either a pre-approval will be accepted, but that cannot be done overnight. So, before beginning your hunt for the home, start hunting for fully approved loan and its ways to get it. Here it is:
1: Loans comparison shopping: Same as you shop for your furniture piece or automobile, shop for loans. Search online for mortgage providers; visit some credit union or local bank. Expand your search to community banks, other financial institutions and compare the terms. All the lenders will check your credit score.
Tip: Check the APR (annual percentage rate) and the interest rate of the lenders. The APR includes everything, the loan origination fees, borrowing amount and all other costs. Time taken is 14 days.
2: Bring a pre-qualification letter: Buyers expect pre-qualification letter before everything. During loan shopping, you must have spoken with lenders and you can get this letter from them. They are easy to get. The lender gives this letter based on your information of income, debts, assets and down payment size.
Tip: There is no need to take loan from the lender who gave the letter. Time taken is 1to3 days.
3: Get pre-approved: Here you need to submit documents such as proof of assets, income, Social Security Card and employment, besides debts records, if any. A stable employment and no debts means the process is for one or two weeks. But, if there are complicating factors such as previous bankruptcy or divorce, self-employed or pending court case, additional documentation is required and it may take weeks to months.
4: Final loan approval: With pre-approval letter armed, you can make an offer and it is accepted. There is a need for an official verification by a licensed appraiser visiting the property and once he approves, it is good news. Time taken is three days to two weeks.