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How Long Does Underwriting Take

If you’re planning on financing a home through a mortgage, you’ll have to go through the underwriting process. The underwriting process helps mortgage lenders and loan officers review your credit and financial history before approving you for financing. But for mortgages, the length of the process varies depending on multiple factors. In this guide, we explore the underwriting process and give you an estimate of how long it will last.

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Underwriting Defined

Underwriting is where you (the borrower) come face to face with the bank’s gatekeeper: the underwriter. The underwriter is the last major hurdle standing between you and closing the loan on your new home. Your lender’s underwriter decides if the mortgage application is a safe risk for the lender.

During the process of underwriting a lender verifies your credit history, income, assets and liabilities before approving you for a home loan. The underwriting process takes place after you’ve made the downpayment on your home, and it’s merely a way for lenders to determine the risk levels associated with giving you a loan.

Underwriters may investigate tax returns, Form W-2s, credit reports, bank statements, savings accounts and your debt-to-income ratio. They may also review the home’s appraisal and verify your income and employment.

Mortgage Underwriting Dos & Don’ts

One way to ensure that there are no unnecessary delays is to do certain things and avoid other things.

What to Do

  • Have all of your documents in order.
  • Be patient.
  • Follow through on any requests made by the underwriter.

What Not to Do

  • Get restless. Underwriting can take up to several weeks, but the actual review process is relatively quick.
  • Apply for new credit. This can affect your credit score and raise red flags about how you treat credit.
  • Quit your job or change jobs. Underwriters will want to know how you will pay your a new mortgage.
  • Suddenly come into a lot of money. Depositing money into your bank account from an undisclosed source like your employer’s payroll, a family member or income from your small business will also raise red flags. Ideally you want all the elements of your application to remain as consistent as possible.

Possible Responses From Underwriters

How Long Does Underwriting Take

The underwriter has the option to approve your application, deny it or say that a decision is pending. Typically, an approval is a green light to schedule a closing. However, an approval may come with conditions so those would have to be met before a closing. A denial can result from a low credit score, being too indebted or not being eligible for a the particular loan type you are seeking. Once you know the reason for the decision you can take steps to address the issue.

A “decision pending” response from the underwriter typically indicates that additional documentation is needed.

How Long Does It Take?

Though the length of the process can vary depending on your particular situation, it can last for as little as two to three days. The process could last longer, though, because it may take multiple days or several weeks for a lender to review your financial records and documents and render a decision.

An underwriter’s process entails loan processing and approving or denying your application. If your application is approved, the underwriter will then finish the process by clearing contingencies and “closing” the mortgage.

Bottom Line

How Long Does Underwriting Take

Underwriters are, in essence, the gatekeepers of home loans. They review your finances and ultimately determine whether to approve you for a mortgage. And even if you’re pre-approved by a lender, your application could still be denied by an underwriter. These professionals are crucial to the home lending process, so it’s best to make sure you’ve prepared all the necessary documents and records before you apply for a loan.

Home Buying Tips

  • If you’re interested in purchasing a home, but you aren’t sure how much you an afford, our home affordability calculator can help. You’ll just need to input your location, marital status, annual income, down payment, credit score and monthly debt.
  • A financial advisor can help you meet your short- and long-term savings goals.

    Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

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Rickie Houston CEPF® Rickie Houston writes on a variety of personal finance topics for SmartAsset. His expertise includes retirement and banking. Rickie is a Certified Educator in Personal Finance (CEPF®). He graduated from Boston University where he received a bachelor’s degree in journalism. He’s contributed to work published in the Boston Globe and has worked alongside award-winning faculty for the New England Center of Investigative Reporting at Boston University. Rickie also enjoys playing the guitar, traveling abroad and discovering new music. He is originally from Wilmington, North Carolina.
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