The Mortgage Timeline
What to expect at each step of the process and how much time to give yourself.
Planning for your mortgage can really start at any time, but often we see homebuyers getting started on this anywhere from 3 to 12 months ahead of closing.
Pre-Approval & Shopping for your Home
Getting pre-approved for a mortgage is potentially useful at any time leading up to the decision to purchase your home. For the most accurate and robust pre-approvals, you will want to include a hard credit pull with this step. These reports have an expiration date of 120 days so this should be done anywhere from 1 to 3 months leading up to making an official offer. You will need to include the pre-approval letter in your offer so the realtor knows you have spoken to a lender.
Making your Offer
Making offers on homes, especially in hot markets, can be an exciting but also difficult thing to time. Sellers are not required to make a decision on a submitted offer within any specific time frame, but often we see this happening within a couple of days to one week of when offers are submitted. Realtors will communicate deadlines and timing as well here as it is specific to the home and seller’s preferences.
If your offer is not accepted, then the shopping process begins again. People may end up in this stage for weeks or even months depending on what they are looking for. The important thing here is to remember that you should never make a decision on your new home purchase purely based on pressure to get an offer accepted because this often leads to overpaying. As long as you are working with a lender that saves your progress, you should be able to pick up here whenever that perfect house comes along!
If your offer gets accepted, a purchase contract will be negotiated. The time spent finalizing the contract will vary depending on the state and housing market. Many states incorporate attorney reviews into the contract negotiation process. Attorney reviews may last for a few weeks. If a formal review process isn’t required, a contract may be finalized in as little as one day.
It;s important to remember that the settlement/closing date you agree upon in your contract will determine how long you have to complete the mortgage process. We most commonly see this range from 30 to 60 days. Although, there can be shorter periods of time in really competitive markets and longer periods for new construction purchases. All the more reason to be prepared with your mortgage ahead of time.
Selecting your Mortgage
This should be done within one week of signing your contract, especially for contracts that have a closing date within the next 30 to 45 days. If you have a longer-term contract, you may want to consider the best time to lock in your rate. Lenders are largely exposed to market dynamics, so often the best-priced option today will not be the best-priced option in 30 days. For longer term contracts, we still recommend starting the approval process within the first couple of weeks of signing your contract. Work closely with your mortgage advisor to decide the best time to lock in an option!
The mortgage application process should typically take one day. If you know from your earlier planning and diligence that there are potential components of your mortgage profile that could make things more complicated, then timing may be a bit longer here. It is best to identify potential qualification issues at this point while there is still time to find other mortgage options. If the issues are property-related, you can walk away from your contract before getting too far along. There are typically dates and “contingencies” in your purchase contract that cover these details.
Initial Disclosures are federally required to be sent within 3 business days of your official mortgage application, but most often they will be sent within one business day from when you apply. Disclosures will go out whether or not you decide to lock. We recommend that you review, ask any questions, and sign within 3 days of receiving them via email. A Loan Estimate will be included in your disclosure package. This document captures a general estimate of your monthly mortgage payment, closing costs, and cash needed to close. Federal guidelines require the Loan Estimate to be acknowledged no later than 7 days prior to closing. Details may change slightly as the application progresses, but it’s important to sign your Initial Loan Estimate as soon as feasible to avoid potential closing delays.
Submission to Underwriting: This will be completed once disclosures have been signed and all up-front income, assets, and credit documentation have been provided. The goal is to get to this stage within 3 days to one week from when you apply.
Conditional Approval: This is issued upon a complete review of your initial submission to underwriting (UW). Once your file is submitted to UW, the wait time is typically 2-5 business days depending on the lender. We aim for 1-3 business days in most purchase-related situations. The conditional approval will outline any additional documents (i.e., conditions) the underwriter deems necessary to issue final approval.
Final Approval: You will receive Final Approval once all the conditions from the conditional approval are met. This includes the clearance of any third-party items such as title, homeowners insurance, and appraisal. This will typically take anywhere from 3 to 6 weeks depending on timing of third party items and the underwriting process.
Appraisal, Title, HOI
Appraisal credit card authorization request: We will send this form to you soon after sending your initial disclosures. Please complete this form within 2 business days, so that we can order your appraisal as soon as possible.
Appraisal: We will typically order your appraisal once we receive the completed authorization request. Appraisals typically take 3 to 4 weeks to come back, but they can take shorter or longer, depending on the location of your property. Please note that rural areas will take longer.
Title company contact information: We aim to have Title contact information 2 days after you sign your initial disclosures. Please note that you will choose your Title agent and depending on the location, the Title work can take up to 4 weeks to be completed.
Homeowner’s insurance finalized policy: We request that you provide us with the contact information of your Homeowner’s Insurance agent as soon as you’ve settled on an agency. It’s best to finalize your Homeowner’s Insurance policy no later than 10 days prior to closing to avoid closing delays. Please note the underwriter will need to approve the insurance policy prior to issuing Final Approval.
You will receive your Preliminary Closing Disclosure (Prelim CD), also known as the Initial Closing Disclosure (ICD) once Title, Appraisal, and Homeowner’s Insurance are submitted and approved. Mortgage guidelines require that the borrower acknowledge the Prelim CD at least 3 business days prior to closing. Therefore, it’s best to submit third party items as soon as possible to avoid closing delays.
Please note, significant changes to your Closing Disclosure may trigger an additional 3 business day waiting period. Please be sure to finalize your loan details no later than 10 days prior to closing to avoid delays.
Final Approval (Clear to Close)
Our goal is to have the final Clear to Close from the lender at least 3 days ahead of closing. Don’t worry if you aren’t cleared to close this early, you might get final approval with as little as 1 day prior to closing while still being able to close on time.