Now that you’re done with the home loan application, your mortgage application is now working its way to processing, and then closing. But then you find out that your home loan won’t be officially closing for weeks or a month. You might be wondering, what’s taking so long?
During the mortgage processing process, your loan application would have to pass through the hands of at least 20 loan officers. With the number of individuals dealing with your loan application, it’s extremely easy for things to be on a backlog. Note also that the mortgage processing, underwriting, and settlement teams would have to check your file before it could be officially closed.
A Flood of Mortgage Applications
Once people (most probably including you) get wind of low mortgage rates, they would flock to lenders to try and apply for a loan or refinance their existing one. This means that once rates drop, the volume of applications increase, which would mean longer loan processing times.
This is a common reason for longer processing times, says a mortgage officer in Utah. Keep in mind that lenders must carefully evaluate the borrower’s risk before approving or denying a loan application. This means verifying that all the information you submitted is accurate and true. This verification process might take some time, especially if the references you included are not cooperative or difficult to contact.
More Stringent Lending Standards
Due to the subprime mortgage crisis, a majority of lenders must now comply with more stringent lending standards, such as reverifications and reevaluations of relevant documentation. They must likewise follow stricter guidelines and adhere to various compliance checks, which in turn prolong the loan processing time.
As you can see, there’s no one scenario that applies to each borrower’s specific circumstances because of the different factors that could impact your loan processing time. Don’t be scared to ask questions in the event that you’re confused or unsure of something during the application.