You’ve just submitted a jumbo loan application to pay for the house of your dreams, and you are anxiously awaiting the approval. Unfortunately, a few days pass by, and you haven’t heard back from the loan company. You start to wonder, how long is the underwriting process going to take?
On average, the underwriting process for a loan takes 5 to 8 business days. However, it can be completed in as little as 72 hours or as long as 45 days depending on your financial history and the current capacity of the lender.
In this article, we will give you an overview of the underwriting process for a jumbo loan to help you understand why the process can take so long. Additionally, we will give you a few tips on how to help speed up the process.
How Long the Underwriting Process Takes
It’s often difficult for a lender to give you an exact time frame for how long the underwriting process typically takes. So instead, the better question to ask when searching for a lender is how long it is currently taking them to close on a home.
A few different factors that will impact the answer to this question include:
- Internal staffing policies
- The volume of loan applications currently in the process
- The complexity of your loan profile
Suppose you have a perfect credit score, no missed payments, and make enough money relative to the amount of the loan. In that case, the underwriting process is going to go a lot faster for you than someone with poor credit who is unlikely to be able to meet the monthly payment.
An Overview of the Underwriting Process
The underwriting process involves three major steps. These include:
- Credit approval
- Conditional approval
- Final approval
Let’s take a look at what happens in each of those steps.
Credit Approval: Initial Step in Review
This is the portion of the process where the underwriter verifies all the documentation that was included in your loan application. They look at the following items during this stage in the process:
- Your credit score and history.
- Income and employment – it’s better if you have at least 24 months of consecutive employment. Any gaps will require an explanation.
- Debt ratios – If your debt-to-income ratio is not enough to cover the cost of the monthly payment, then you will not be approved.
- Appraisal – The determination of your house’s fair market value. If it’s not worth the sales price, then you will have to pay the difference or renegotiate.
If you pass the initial credit approval, then the underwriter will typically issue a conditional approval.
Conditional approval: Good Sign for Loan
If you receive conditional approval from the underwriter, it is a good sign. This essentially means that the underwriter believes your loan will close and just needs some additional documentation to issue the final approval.
Some common things that the underwriter will request during the conditional approval phase include:
- Documentation to support large cash deposits.
- The paying off of certain debts before approval.
- Bank statements covering the past 12 months
- Additional details from the appraisal
The time it takes to get the final approval is ultimately dependent on how long it takes you to provide the requested documentation.
Final Approval: Close on Your House
After providing the documents requested after the conditional approval, the underwriter will make their final determination. If you receive the approval, it means you can move forward with closing on the house.
If you are denied, it’s typically because a major change in your financial situation or the documentation you provided raised red flags. You can ask your loan officer why you were denied and even appeal the decision if you think it was inaccurate or the lender was missing critical information.
Speed Up the Underwriting Process
Although the time it takes for the lender to complete the underwriting process is mostly determined by the lender, there are some things that you can do to help speed up the process.
The most important thing to do is to fill out your loan application as thoroughly as possible and provide all the necessary documentation. The back and forth of requesting additional information and submitting it takes a lot of time. Submitting it all correctly in the first place will speed up the process.
When the underwriter does ultimately ask for additional information it’s best to provide it as quickly as possible. To do this, you should have bank statements, W-9s, pay stubs, etc., ready ahead of the process if requested.
One final thing that will help speed up the process is maintaining good communication with your loan officer. You should ask how long it should take to receive a determination. If you don’t hear back by the pre-determined date, it’s okay to reach out to them for an update.
Patience Speeds Up Process
The underwriting process can take anywhere from 3 days to several weeks. That’s a huge gap! Your lender is ultimately giving you a large amount of money, so it will take time for them to determine if they think they can get that money back or not. It’s essential to remain patient throughout the process and recognize that at the end of it waiting for the approval to purchase your dream home.