You're eager to claim your next home, move in and start planting roots. But first, you've got to clear things with your mortgage lender. Ideally, you want to close a mortgage quickly. That puts you on a faster track to ownership, of course. It could also get you locked into a lower interest rate.
But to close your mortgage faster, you'll need to get your financial house in order. That means being proactive, providing the needed documents early in the process, and responding quickly to inquiries. A quick closing is possible, but a lot will depend on you.
Why you want to close a mortgage sooner
Mac Cregger is senior vice president and regional manager for Angel Oak Home Loans in Atlanta. He says 30 days is the average time it takes to close most mortgages after you've signed a purchase contract. But you can shave a lot of time off that average with a little hustle. And that's a preferred scenario.
"By speeding up the closing process, buyers can benefit," he says. "They can lock in their rate sooner and obtain potentially a lower mortgage rate. That's because shorter lock periods are often cheaper. Plus, if you close your mortgage faster, you can get back to the normalcy of life without all the red tape."
Mike Scott, senior mortgage loan officer for Independent Bank in Dallas, agrees.
"The longer between the contract date and the closing date, the more things can go wrong. There are no substantial advantages to prolonging a closing," Scott notes.
But be careful here: You don't want to cut corners.
"Sometimes, a buyer in a rush can end up not doing the full due diligence. This can include choosing to forego having a home inspection performed. That can end up costing thousands of dollars in repairs later if the home has defects that weren't identified," adds Scott.
Related: What Can Go Wrong at Your Closing?
How to close a mortgage faster
First, don't shop for a home before getting preapproved for your mortgage. That means you, the borrower, are approved for a mortgage as long as the property meets the lender's requirements. This is also called "credit approval," and you'll need to go through the full application process to get it. Then, the lender just has to check out the property.
When going for preapproval, be prepared to prove your income, explain or fix credit issues and show the source of your down payment.
Clifton Rhea, sales manager for Circle Home in Timonium, Maryland, says a quick closing is doable.
"A good, organized buyer can cut two weeks off the process. If you produce everything needed promptly, the loan can be done smooth and easy," says Rhea.
To close your mortgage faster, try these tips:
Gather all your necessary documents well ahead of time. "Waiting to provide things like recent pay stubs, W-2 forms, and bank statements can delay the mortgage process," suggests Cregger.
Shop around and get preapproved from the right lender. "There can be a major difference," Cregger continues, "in time requirements between lenders," Scott says. So ask the lender if it's possible to close quickly -- in less than 30 days -- and what's required. Often, a lender's centralized processing and underwriting process will determine if a quick closing is possible.
Opt for a lender that asks for income and asset documentation up front. "Why? Because there may be something on your tax returns that may disqualify you from using certain loan programs. I have had buyers understate or overstate their income verbally, only to have the actual documentation prove something completely different, which impacts the ability to approve the loan. This can delay or complicate a closing," explains Scott.
Schedule a home inspection early in the process. Ideally, this should happen after the seller accepts your offer and before the appraisal occurs, Rhea advises.
Shop for homeowners insurance as soon as you go under contract on the home. "The longer you wait, the longer the process can be delayed," warns Scott.
Don't schedule major life changes while your loan is in process. "That means avoid leaving your job or buying a car or other large item," says Cregger.
Don't fiddle with your finances or credit. Avoid moving large funds from one account to another, and take a pass on closing or opening any lines of credit.
Have your down payment and closing cost funds ready and available.
Related: Close Quickly and Get the Best Mortgage Rates
Timing Your Mortgage Closing
Despite your best efforts, your mortgage closing might take longer than expected. So be patient and understand the steps involved.
"First, a lender is required to send out disclosures within three business days of your loan application. Many lenders won't order the appraisal until you've signed the disclosures, including intent to proceed," adds Scott. You may have to pay upfront for your home appraisal before the lender orders it.
Note that the appraisal often takes one to two weeks. While waiting for it, the lender will order the title work, flood certification, and other items, like verification of employment or rental.
"Once the appraisal comes in, the file can usually be submitted to the underwriter. That's assuming the title work and other needed items are back," Scott notes.
The underwriter often responds within two business days; they'll indicate any conditions they feel are warranted or still needed.
"If the loan is approved without any conditions, the file is moved to the closing department. This usually takes one or more days to prepare the settlement statement in conjunction with the title company," Scott says. "Then, the settlement statement is sent to you at least three business days before closing."
What does this mean?
"Sometimes, as much as you want to move forward and close a mortgage quickly, it's out of your hands or the lender's hands," says Scott.
Get preapproved for your mortgage now and increase your odds of a quick closing.
