March 5, 2021
6 MINUTE READ
While buying a home is undoubtedly an exciting adventure, it can also be a stressful process, as it is often easily the largest and most complex purchase of your life. One of the most confusing parts of the transaction is the mortgage process timeline.
As you’re preparing to apply for a mortgage, it can definitely pay off to know what to expect. Of course, each mortgage will have its own unique timeline, but from beginning to end, most mortgage processes can span between three to five months.
When you’re ready to find your dream home, it’s important to understand the timeline of the average mortgage process, so that you know what to expect. Here’s a quick look at an average mortgage timeline:
Now, let’s take a closer look at each of these steps.
In this step, you’ll determine what type of mortgage you are looking for, as well as examine your current credit score and get an idea of how much you can afford to pay monthly for your mortgage. Allow yourself about a week for this part of the process, so that you’re not rushed. Your second week should be spending getting your pre-approval letter squared away.
A big part of your mortgage terms, including how much you can borrow and the interest rate and fees you will pay, will depend on your credit history and your credit score, so it’s important to check your credit report regularly, giving yourself time to catch any errors and improve your score before applying for a mortgage, if necessary.
You will also want to create a budget, based on the type of mortgage you choose. Regardless of what your lender says you can borrow, the biggest mistake that homebuyers make is spending what they are fully qualified for — rather than spending what their budget allows.
Once you know what you want to spend, shop around for a mortgage and get prequalified for a potential lender. Keep in mind that pre-qualification doesn’t impact your credit score in the way that a hard inquiry will, so it won’t impact your credit rating — but it will give you a good idea of what you will qualify for. This is the best way to compare lenders “apples to apples.”
At this stage of the mortgage process timeline, your focus is on finding the home you love and negotiating with the seller on price. The timeline for this step can vary greatly, depending on how quickly you and your agent find a home that you love. Once you find your dream home, your agent will help you decide on an offer and then submit it to the seller’s agent.
The offer you submit will include a price, a closing time frame (most often 30 to 90 days from the accepted offer), and any conditions or contingencies that would allow you to renegotiate or cancel the contract.
Next up in the mortgage process timeline, you will finalize your mortgage offers and get loan estimates (expect about a week here). Your inspection should add about another week and the appraisal will take slightly longer, usually about 3 to 4 weeks.
You should already have quotes from multiple lenders, which could be a mix of different types of financial institutions (local lenders, credit unions, big banks, etc). Request a loan estimate from each of the lenders, supplying all of them with the same details: loan type, rate type, loan term, the amount of your down payment, the loan amount, points and credit. The lenders should be able to get back to you with a loan estimate within 3 to 4 days.
Always keep in mind that you will only get a loan estimate with an official loan application. It is important to consider the potential impact that multiple mortgage applications can have on your credit rating. If you apply for multiple mortgages within a 45-day window, they will all count as a single hard inquiry on your credit report (which may lower your score slightly). If you apply for additional mortgages outside this window, it may have a larger impact on your credit score.
You’ll also want to order a home inspection and schedule a home appraisal at this time, to determine the condition of the home and to validate the home’s value based on the current condition and how similar homes in the area are selling. If the appraised value comes back higher than the sale price, you can feel confident in your purchase. However, if the home appraises for less than the sale price, this may lead to problems, most often because the bank won’t lend more than the appraised value of the property.
Once you have submitted your intent to proceed and your appraisal is complete, your lender will verify details from your application, including your income, assets, debt, and the appraised value of the home. This is where the lender may ask you for additional details on information from your application, such as a large bank deposit. This step should take about a week.
Once you have been cleared to close, the lender will provide a closing disclosure that details the terms of your loan and what you’re expected to pay at closing. You’ll have a few days to review this document, so examine it closely. Once you’ve scheduled your closing, ask your agent what all you should bring to the closing. Most often, this includes a valid ID and your cash to close payment, usually in the form of a cashier’s check. At the closing, you will sign the final sales contract to purchase your home.
At Reali, all of our agents are experts in the areas they serve — and we know how to help you with your real estate search. They’ll support you through the entire process, from search to negotiations, throughout the paperwork process and close.
We combine agent expertise with technology and an array of buyer products and services like Reali CashOffer™ to help you find and WIN the home you want. We can also help you with your online home loan. Ready to get started? Contact us today.