There are many reasons to want to close on a home loan quickly.
For one, when you can close in 30 days or fewer, you may get a lower interest rate than if you need 45 days or more. Also, with a shorten window of time, there’s less chance of something “going wrong” and affecting your final mortgage approval.
The major delays in approving a mortgage loan occur during the underwriting period. But because mortgage underwriting is fairly standard process, you can help your underwriting period close quickly by taking some time to do a little prep work.
Here are some tips to help speed up the closing process and help you close on your mortgage in a timely fashion.
Get your documents in order before applying.
For loan approval, you’ll need to provide recent pay stubs, W–2s, and two most recent statements covering your bank, retirement, and investment accounts. If you’re self–employed, on commission, or receive your income from investments, you may be asked to provide two years of federal income tax returns.
You’ll also need to show the source of your down payment, and keep copies of transactions related to it – for instance, deposit slips, transfers, and canceled checks. If you’re receiving a down payment gift of cash, you’ll be asked to document that gift’s origination.
If you use income from alimony or child support, expect to provide a copy of your divorce decree and proof that you receive the money regularly – canceled checks or deposit images showing the checks going into your account.
Since you know you’ll need these documents as part of your loan approval, compile them in advance. This helps you close your mortgage faster.
Preview your mortgage credit score.
When you know your credit score, it can be easier to shop for and identify the best mortgage loan. If your credit score exceeds 620 or better, and you plan to make a 10% - 20% down payment, you’ll likely qualify for optimal loan terms.
Checking your credit also allows you to identify any inaccuracies in your credit report that could negatively impact your loan approval. According to CNBC, one third of Americas find errors on their credit report, so it’s not as uncommon as you may think. The goal here is to remove any inaccuracies before your loan is submitted into underwriting.
Avoid life changes while your loan is in process.
What’s a “material change” to your application? Lots of things!
Don’t quit or change your job, open up new lines of credit, make any large purchases, or do anything that could jeopardize your application.
If you absolutely must do one of these things, have a conversation with your mortgage lender first. Your lender may have advice on how to move forward with as little disruption to the loan process as possible.
Stay in touch with your lender.
The best thing you can do when your loan is in process is to remain available and responsive to your lender. Mortgage applications almost always trigger requests for more information or documentation. So, respond quickly to requests for additional paperwork or questions.
Ready to get started?
Whether you’re buying, building, or simply need a bigger place to call home, Horizon Bank can help. Our online application process is simple and convenient. Click here to get started.