Everyone dreams of owning a house, but when it comes to financing those dreams, many problems tend to arise. That is probably why most people turn to loans to help them get by. Whether through a bank or a private lender, seeking a mortgage can be extremely taxing. It can take weeks, if not many months, just to get approved for a home loan. But what happens during all this time, and why does it take so long? This blog will tell you all about the three main steps of the home loan approval process.
How Long Does it Take to Get a Home Loan Approval?
Typically, getting approval for a home loan can take you several months. In rare cases, it could take a month, at minimum. However, people usually have to wait months to hear the good news. The question remains answered, though, why does it take that long? Well, you no longer have to wait for that answer, at least. Here are the three primary steps money lenders take when working on a home loan approval case.
Starting at the initial stage, a pre-qualification can last for a few minutes or stretch out to days. Basically, pre-qualification is a simple and informal process that helps the lender assess you. It’s an interview of sorts for them to see if you’re even eligible to apply for a mortgage. Moreover, during this step, they also analyze how much they can let you borrow.
Pre-qualification is the easiest step since you can get approved by almost all lenders. Whether online or in person, you don’t have to worry about it much. Especially considering how your formal documentation isn’t needed either. Nonetheless, it’s vital that the information you provide is authentic. This includes all your personal data like mode of income, credit history, employment, etc.
Once you pass the pre-qualification round, you get bumped up to the pre-approval site. This takes up most of the time, lasting from a week to three months at a minimum.
Unlike the previous step, pre-approval is a formal process where the lender evaluates your financial standing. Almost everything depends on this step since if things go well, you could move up the waitlist instantly. Not to mention, most sellers refuse even to consider an offer on a house until you have a pre-approval letter in your grasp. This gives you all the credibility you need to buy a home.
In addition, the lender might ask for the following documents to properly gauge your financial stability:
- Driver’s License
- Social Security Card / Number
- Bank Statements for up to 2 months
- Employment History of the past 2 years
- Tax Returns
- Paystubs of an entire month
When you get to the last step, things will begin to come along on their own. The final approval lasts for a handful of days or, in some cases, a few weeks. What’s more important, though, is that when your offer on the house is accepted, the lender takes matters into their own hands.
The lender schedules an appraisal on the house you want to buy. This allows them to note if the house’s market value is the same as the money you are borrowing.
Lastly, once the lender makes their decision, they’ll allot you one of the following four conclusions:
- Approved with Conditions
Where Can I Get a Short-Term Home Loan?
All in all, getting a home loan can take you around days to months on end. Although the process is tedious, the final result is almost always worth it. For more information on home loans, contact Red Door Funding at (832) 539-1099.