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Old 07-21-2010, 10:35 PM
 
Location: SoCal
674 posts, read 2,527,077 times
Reputation: 481

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I'm going to be looking into getting a pre-approved mortgage, but was wondering what the time line are for the following:

1) How long does it take to get pre-approved?

2) How long do I have to accept the pre-approved mortgage offer?

3) How long do I have to close on a sale after being pre-approved?

4) Is there anyway to get an extension, in case I don't close in time? If no, would it be advisable to go through the process of getting pre-approved again and is there a higher probability I will not get approved the second time around (assuming nothing has changed with regards to my credit/financial situation)?

I understand that different institutions will give different timeframes, but I'm really just looking at average time frames.

This way, I know if I should have a property in mind before getting pre-approved, or if I can wait to start my home shopping after the pre-approval.
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Old 07-22-2010, 08:07 AM
 
Location: Laguna Niguel, CA
768 posts, read 4,117,562 times
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Before you approach a lender for pre-approval it's a good idea to check out the homes available out there so you know what price range you need to be looking in. This will help you and the loan officer have an initial sales price range to go off of. It's always good to be pre-approved before seriously shopping, as you need to put the horse (mortgage) before the cart (house), plus most real estate agents won't take you too seriously if they aren't sure you are pre-approved.

During the pre-approval process your financials, credit and employment are all checked out. The pre-approval process can be as quick as same day, up to a week, depending on how complicated your situation is and how quick you respond with requested information. Someone who has excellent credit, been at their jobs for 2+ years, makes salary, and has plenty of money in checking/savings (all from payroll deposits), and the down payment is coming from their own funds - should just take an hour or so. Someone who has switched employers recently, is making salary plus commissions & overtime and needs those commissions & overtime to qualify, is getting gift funds for down payment, has several large undocumented deposits into their checking account, and has some blemishes on credit would take longer, perhaps even up to a week.

Technically there is an acceptance of the mortgage offer, and that is when you go in to sign the final loan documents in front of a notary (after your offer is accepted by the seller, after appraisal is done, after all of your documents are reviewed by underwriting, etc.), at the very end of the entire homebuying transaction. But it's not like a credit card where you apply over the phone and within minutes they come back to tell you are approved and what the terms are, then you decide if you want to accept it or not, and credit is immediately granted. You apply, the pre-approval process is initiated, then you are pre-approved (or not).

Pre-approvals are as good as long as the documentation in the file hasn't expired. Paycheck stubs & asset (bank) statements need to be updated every 30 days, and credit reports are good for 90-120 days. Usually the pre-approval letter doesn't list an expiration date so make sure you ask your loan officer how long it is good for and what exactly will they need to extend it. When the documentation expires, you just need to provide updated documentation and the pre-approval can be extended. No need to start the entire process over again or anything.

The steps when buying a home normally go like:

1. Meet with a loan officer (this can be face to face or over the phone, I do not recommend solely done via email)
2. Loan officer will explain the process to the homebuyer, what will be done at each milestone, when out of pocket costs should be expected
3. Loan officer and homebuyer will verbally discuss the homebuyers situation, including financials, credit and any special circumstances the homebuyer is in (like getting gift funds, starting a new job in a new area, past employment, etc.)
4. Homebuyer will complete a loan application (this is recommended to do with the loan officer "live", not just simply filling out the application and sending it to the loan officer) and credit is checked
5. Homebuyer will provide loan officer documents the loan officer needs (paycheck stubs, W-2's, tax returns, bank statements, letters of explanation)
6. Loan officer reviews documents and contacts employers for any further required verification (for example averaging overtime, commissions, etc. and clarifying start dates if employment has been less than 2 years), including running the loan through the automated underwriting system (be it FHA, VA or conventional). If the loan is "borderline" then the loan officer should contact underwriting to get clarification on how any unique aspects of the loan will be handled, and may even go so far as to send the entire loan file to underwriting to have a conditional underwriting approval issued for a "TBD" property address.
7. Loan officer issues a pre-approval letter letting the homebuyer know they are pre-approved for a certain amount
8. Homebuyer makes an offer and it's accepted
9. Homebuyer or their real estate agent provides loan officer copy of contract terms
10. Loan officer re-runs actual terms/conditions through automated underwriting again
11. Loan officer/processing staff generates the loan application/disclosures for the homebuyer to sign/initial/date/return to the loan officer
12. Loan is sent to underwriting (sometimes the title report needs to come in, sometimes the appraisal needs to come in - YMMV depending on the lender - the title report is ordered immediately, the appraisal can be ordered once you receive the application/disclosures)
13. Underwriting reviews all documents and usually additional documents (called "conditions") are required, such as evidence of homeowners insurance, small items on the appraisal corrected (if needed), amongst a laundry list of possibilities (brace yourself for the underwriter to ask for small items so it doesn't come as a surprise, sometimes it isn't much at all, sometimes it can be a bit)
14. Conditions are sent in to underwriter and reviewed, final loan approval is issued
15. Loan officer informs homebuyer when documents can be prepared and delivered to title/escrow officer or closing attorney ("closing agent" is the generic term) for the closing (usually no more than 2 days from final approval)
16. Closing agent prepares the final settlement statement (called a HUD-1) for lender approval, lender approves, homebuyer goes in to sign final loan documents in front of a notary
17. Depending on the state you are buying in, it may fund/record the day you sign or there could be a few day period after you sign before it funds & records (rule of thumb is if you are east of the Rocky Mountains it's the same day, west of the Rocky Mountains usually there is a couple day delay - but vice versa can certainly be arranged ahead of time).
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Old 07-22-2010, 09:30 PM
 
Location: SoCal
674 posts, read 2,527,077 times
Reputation: 481
Awesome info ... thank you for a thorough response!
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Old 07-23-2010, 07:19 PM
 
43 posts, read 220,946 times
Reputation: 13
I am on perpetual #12... sigh...Good info Shane.
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Old 08-31-2010, 09:14 AM
 
2 posts, read 196,263 times
Reputation: 20
My son just turned down for a home loan in underwriting - he went thru the correct process mentioned above - a pre approval letter was sent in with the contract on the house - the process went past the closing date agreed upon and extensions kept being sent to the seller but he is being charged $100.00 per day for each day past the closing date, 5 days after closing date he is denied becasue of not having enough credit history. He is also losing $1000.00 in earnest money, the appraisal fees, and he also had to have water and electric turned on for the appraisal and those fees are also lost - Why would his loan processor not have forseen this happening?
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Old 08-31-2010, 12:26 PM
 
Location: Plano, Texas
1,675 posts, read 6,615,780 times
Reputation: 693
Seems like he didnt have the best loan officer working for him. Does he have any tradelines, meaning open accounts such as a credit card, car loan, student loan?

Also, more than likely he is doing a FHA loan which allows for a co-signor. Maybe you could co sign on the loan to get him approved.
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Old 08-31-2010, 01:23 PM
 
2 posts, read 196,263 times
Reputation: 20
Yes it is FHA loan - no he does not have any open accounts on his credit history. His car is paid for and he has 2 credits cards - both with 0 ballance. I just bought a home last year myslef - I am not sure if they woudl consider me as a co borrower - worth trying.
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Old 04-17-2013, 12:45 AM
 
1 posts, read 71,975 times
Reputation: 11
It is always so difficult have to bit a home after the find the right one? I am pre approved for FHA march 30th 2013 but I still don't have a latter from my lender to be pre approved, she told me look for a home but is to difficult because to many people are bit the home that I really like what can I do???? please help :0)
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Old 04-17-2013, 05:23 AM
 
Location: MID ATLANTIC
8,140 posts, read 19,997,539 times
Reputation: 9382
Quote:
Originally Posted by wrmomhoward View Post
Yes it is FHA loan - no he does not have any open accounts on his credit history. His car is paid for and he has 2 credits cards - both with 0 ballance. I just bought a home last year myslef - I am not sure if they woudl consider me as a co borrower - worth trying.
Your son allowed his financing contingency to be removed - his agent should never have let this happen without an underwriter's approval in hand. Tell him to change agents now. This one has already cost him too much. He needs to be with an agent and a loan officer that know how to build credit. Then he should buy a home.
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Old 04-17-2013, 11:46 AM
 
3,806 posts, read 8,255,979 times
Reputation: 4943
The myopic search for the almighty "Best Rate" tends to ignore things like Qualatative Assessment of the company and person making the offer.

When will people learn that there's a little bit more to it than getting 3.25% as opposed to 3.375%.

And pre-approval should take minutes. You fill out the application, you send tax returns and paystubs, and literally MINUTES later you should have your pre-qual letter. If it's a bid situation or they want Findings, still same-day.
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