When you submit a home loan application, you normally receive a preliminary approval or declination from the loan officer within a few days. However, loan officers are salespeople and loan underwriters ultimately approve or decline loan applications. The underwriter normally has no direct contact with the applicant, but the underwriter does have contact with the loan officer. A number of different factors can impact the amount of time it takes for the underwriter to get in touch with the loan officer after the initial application.
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Loan applications are designed so that lenders can gather all of the information that the underwriter needs to know in order to begin the decision-making process. However, an underwriter may contact the loan officer upon receipt of a loan application that has missing information. If you have long breaks in your work history, the underwriter may require an explanation. If your application contains contradictory information from one section to the next, then the underwriter will usually contact the loan officer before taking any action on the loan.
Typically, banks have automated underwriting systems that check your credit score when you submit a loan application and you receive a preliminary approval or denial, based in part on that score. The actual loan underwriter does not just reference your credit score but reviews your credit report. If you have a large number of recent inquiries on your credit report, the underwriter may ask the loan officer to contact you for an explanation to ensure that you are not establishing several new credit lines simultaneously. If you do open several credit lines at the same time, your loan may not get approved because the lender cannot determine your debt-to-income ratio if you have multiple credit applications awaiting approval. Therefore, credit inquiries can prompt a quick response from an underwriter but not always a final decision.
Depending on the workload of the underwriter, it could take a few days before the loan officer hears anything back from the underwriter. If you provide the lender with supporting documentation such as your last two year's tax returns, 60 days of bank statements and your warranty deed when you submit your application, then the underwriter can decide on the loan more quickly and you may even get a response on the day that you submit your application. If you do not submit supporting documentation, then the underwriter should send the loan officer a list of stipulations that you must clear before the underwriting process can proceed, such as verifying your income. When you provide this information, the underwriter gives you a conditional approval, although it could take a few days or a few weeks before you get the conditional approval.
After you receive your conditional approval, the lender has to verify that your home hold's sufficient value to back the loan and must make sure that you have insurance and that no other liens exist on your home. It usually takes between 45 and 60 days to fully underwrite a loan, so after your conditional approval it usually takes several weeks before the underwriter communicates a final decision to the loan officer. It could take longer to receive a final approval if the underwriter has a heavy workload or if you have a complicated application.
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