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Have a general question for any loan officers and/or underwriters pertaining to the length of time from mortgage loan origination to approval.
Just a couple of years ago, many mortgage professionals were quoting four to six weeks as the typical period for approval for a convention loan. For FHA/VA/USDA, it was typically about six to eight weeks.
In conversation with a few mortgage originators in my area, the new underwriting rules that went into effect recently seems to have added another two weeks or more to that process. Most of this time increase seems to be related to income verification and longer turn times on the appraisal reports as this report seems to be the last required as part of the mortgage application process. (Makes sense -- if the borrowers is not otherwise qualified for the loan, why stick them with a $500 bill for an appraisal.)
Question: What is the average (normal?) approval period NOW for a conventional loan vs. FHA/VA/USDA loans?
This is just for my own information as I, as an appraiser, like to know what is happening in the mortgage origination world.
BTW, this is for a typical purchase transaction. Clearly, REO, foreclosures, and atypical properties might take longer from origination to closing.
Conventional usually can be completed in 14-21 days, provided all proper documentation have been turned in.
VA/FHA can happen just as quickly, but they are more likely to take a bit longer. A buddy of mine went into contract on 3/10 and funded on 3/27 for a VA loan, so it can definitely be done quickly.
A majority of it rests on the MLO/Processor. If they are good about getting ALL required documents BEFORE submitting to underwriting, that can take a lot of time out of the process, since the underwriters will come back with less, if any, conditions.
Being a former underwriter, I can't tell you how annoyed I'd get when MLOs would send in docs one by one. Angry emails were common when that happened, haha.
It all depends on how quickly the buyers react to turning in their paperwork. I've had conventional take less than 10 days. I've had VA take about 2 weeks (if the appraiser didn't wait 10 days to go out in the first place), and I've had FHA take under 3 weeks. I've never done a USDA loan, but those are the ones I've heard could take 60+ days.
The biggest hold up for my loans, please don't be offended as your an appraiser, is the appraisal. Many appraisers feel they have 10 days to go out to the property once they accept the assignment, and then another 72 hours to submit their work. The "good" appraisers go out within 2-3 days and turn in their work the next day. I feel those are the most organized appraisers and know what they're doing, in my opinion. The ones that take the maximum time, in my opinion, don't know the market they're appraising in and are out of their element. Appraisers should only take assignments in areas they're familiar with.
Conventional usually can be completed in 14-21 days, provided all proper documentation have been turned in.
VA/FHA can happen just as quickly, but they are more likely to take a bit longer. A buddy of mine went into contract on 3/10 and funded on 3/27 for a VA loan, so it can definitely be done quickly.
OK, this is good to know.
Most builders/sellers and home buyers are telling me that the loans are taking several weeks to complete from origination to closing. All of which makes sense as lenders are asking for more and more information plus home inspections and home appraisals can take several days to complete.
It all depends on how quickly the buyers react to turning in their paperwork. I've had conventional take less than 10 days. I've had VA take about 2 weeks (<snip>), and I've had FHA take under 3 weeks. I've never done a USDA loan, but those are the ones I've heard could take 60+ days.
Is this since the first of the year? Lots of changes in loan underwriting occurred in January. Check out the "Ability to Repay" rule and also the new definition of a "qualified" mortgage.
I'll address your appraisal comments in a post below.
Is this since the first of the year? Lots of changes in loan underwriting occurred in January. Check out the "Ability to Repay" rule and also the new definition of a "qualified" mortgage.
With the lenders I use, most had already implemented the new rules and were using the better ratios already. Nothing major has changed except the actual law. Companies that prepared for the new law changes already had systems in place and didn't really put any glitches into their qualification processes.
The biggest hold up for my loans, please don't be offended as your an appraiser, is the appraisal. Many appraisers feel they have 10 days to go out to the property once they accept the assignment, and then another 72 hours to submit their work. The "good" appraisers go out within 2-3 days and turn in their work the next day. I feel those are the most organized appraisers and know what they're doing, in my opinion. The ones that take the maximum time, in my opinion, don't know the market they're appraising in and are out of their element. Appraisers should only take assignments in areas they're familiar with.
No offense taken!
I have to admit that I chuckled at the comment above -- the portion that I boldfaced. Literally, the stars and planets would have to align and it would absolutely have to be a "cookie cutter" house in the middle of a "cookie cutter" neighborhood.
Not sure where you came up with the precept of a "good" appraiser but, if you find one, they either have absolutely no work or they are what we in the industry call a "skippy".
If I had absolutely no other work scheduled AND I had immediate access to the property AND it was a "cookie cutter" house AND it was not a complex property AND there was sufficient sales data AND I was permitted to use MLS photos (original (non-MLS) photos are now required in most instances) AND I could get the RE agents to call back in a timely manner to data/source verification AND a 30+page report appraisal report with Market Conditions Addendum wasn't required AND.....
Well, I'm sure you get the picture.
Your definition of a "good" appraiser above is a pipe dream. Maybe twelve years ago when an appraisal report was two pages long and you could use MLS photos but those days are gone. Even the simplest property can easily take 8 to 12 hours to write up which doesn't include the site visit (time and miles) nor the travel required for comp pictures (more time and miles).
As slow as most markets are, I normally work with a five to seven business day turn time and can be much longer for unique/non-conforming properties. When things are busy, it can be three weeks or more.
If you (or an RE agent) wants to turn an appraisal around faster, you can help in two ways: first, gaining access to the subject property and, second, providing data verification on the conditions of sale for possible comparable properties.
It seems that some homeowners just cannot be bothered to make time for the appraiser (and some didn't understand that an appraiser would even need access to the property!). It's funny -- they'll bend over backward to accommodate a plumber or electrician but can't seem to accommodate someone involved in the sale or refi of their home. Not having access to the property is a show-stopper. If you want to help, talk to your property owners and ensure they KNOW that they will be contacted for access and that need to make that access happen.
Lastly, some RE agents just cannot be bothered to return an appraiser's call about a listing being considered as a comparable property for the appraisal report. Federal lending guidelines (for any appraisal going to the secondary market) state that the MLS is not a trusted data source. There must be another data source, specifically any of the following: buyer, seller, listing agent, buyer's agent, mortgage lender, or title company. This is FHA/HUD guidance but is generally accepted as the standard for conventional loans as well. In my local MLS, the contact information for the buyer or seller is not available but information is available for the listing agent and selling agent. Consequently, that is who gets called.
Most agents in my area are used to hearing from me so they return my calls quickly. Not hearing from the agent in a timely manner doesn't exclude a comp from consideration but it does slow down the preparation of the report and requires a written disclosure in the workfile and, possibly, the actual report, both of which slows the report preparation even further.
Most "good" appraisers have several appraisals in process at the same time with appointments already scheduled so "getting out" within 2-3 days isn't likely to happen. I try to schedule a couple of site visits on the same day if they are close to each other but that is hit-or-miss. Having a one-day turn time on a report is even less likely. The report is just too long and the analysis is too complicated to rush.
And a TRULY "good" appraiser doesn't take shortcuts in their report. Ever.
Considering the vast majority of my area consists of "master planned" communities, what I've outlined is not unrealistic. I understand unique properties take longer, but that's not the case for the vast majority of Austin (and suburbs). Lake front would be a property that takes longer. A house that's been torn down and rebuilt among the older homes would take longer. I understand that. But master planned communities are easy to do, and that's the majority of the area. I didn't say go out the same day or next day, as those would be the less desirable appraisers just like an agent who can jump at any given call is one who doesn't have any business. But scheduling out 3 days shouldn't be an issue.
Also, my area is on lockboxes so access is easy. There is no one to coordinate a showing with except for a courtesy call to give a heads up, except for the multi-million dollar properties that require the agent to meet you there, but again, they're the exception. I'm speaking in general terms that apply the majority of the time.
Also, my area is on lockboxes so access is easy. There is no one to coordinate a showing with except for a courtesy call to give a heads up, except for the multi-million dollar properties that require the agent to meet you there, but again, they're the exception. I'm speaking in general terms that apply the majority of the time.
This is OK for new construction or vacant properties. Not the case with an occupied dwelling.
I have to schedule around people's lives.
And if I ever heard another comment like the one below, it'll be too soon.
Homeowner: "You'll have to come after 6:30 p.m. when I get home or come on the weekend. I have to work during the day."
Is this since the first of the year? Lots of changes in loan underwriting occurred in January. Check out the "Ability to Repay" rule and also the new definition of a "qualified" mortgage.
I'll address your appraisal comments in a post below.
The QM implementation hasn't really done much to the mortgage processing times. It's simply about ensuring the applicant can adequately afford a mortgage - it's fairly straight forward, at least for conventional deals.
FHA/VA get a little murky because FHA can exceed 43% total/backend DTI with proper documentation, and VA has had a generally weird way of calculating DTI to begin with.
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