How Many Days Does It Take To Close A Loan?
It is best to always give 30 to 45 days in this current lending environment and to not change the closing date. The amount of work and time it takes to close a loan today is 50 times longer than 2 years ago.
What most don’t understand, nor should they know, is how the loan process works. When a Mortgage Professional receives a contract they take the contract and enter all of the information into their loan software which includes loan commitment and closing dates. Reports are continually generated to prioritize loans and make sure closing dates are met. If these dates change it causes a dominio effect. Imagine what would happen if everyone tried to move up their closing dates. It would be chaos.
Once that info is inputted the appraisal and title are ordered along with the due diligence measures which some of them I don’t even know about. Examples are ordering tax transricpts (4506T), fraud guard (MERs), Sunbiz, 411.com, Verification of Employment (VOE), Verification of Deposits (VOD), automated valuation models (AVM) for value, and the list goes on. There are other items done prior to closing similar to what is done at the start. If you would like to learn more about what those items are and want to fall asleep go to the link below and read up on Fannie Mae’s Loan Quality Initiative (LQI) https://www.efanniemae.com/sf/lqi/.
Then the loan officer gathers the documentation from the borrower, finds things that are missing, requests those conditions, they aren’t right or don’t meet the guidelines, the loan officer requests more information, they receive it, the loan goes to the processor, the processor finds more items that are needed, requests them, receives them, there still are more because it’s not what was requested or doesn’t mean our guidelines, we receive those conditions, the loan gets submitted to underwriting, the underwriter conditions the file, we request them from the borrower, the borrower sends them in, they aren’t right or don’t meet the guidelines, we receive them again, it goes back to the underwriter, the underwriter finds something else wrong, I can keep going but I hope you get the idea.
Once the loan is cleared to close it goes to the closing department. The closing department doesn’t automatically pick up that file and begin working on it. It goes to the bottom of the pile should there be a pile. Once the closer gets to the file they will review it and make sure we are meeting all of the closing conditions. And guess what, most of the time there things that need to be fixed.
There is so much involved in the loan process even if everything goes smoothly which most of the time there are issues i.e. appraised value, repairs, large deposits, cash deposits, etc. You would be amazed. Underwriters are going to miss items and add them later because they are human. When an underwriter gets a file it is a story that they have to figure out because they didn’t take the loan application from day one and know every little detail like the loan officer. Guess why underwriters also miss things? It’s because everyone is rushing them and they have to get through so many files since someone changed a closing date, etc.