How long does it take to close a loan

How long does it take to close a loan?

Getting a home mortgage loan in today’s world is a cumbersome paperwork intensive process.  Especially with all the recent regulatory changes added since the market crash.

images98725Not everyone realizes how long the process takes, but this is good information to understand when setting proper expectations for closing dates.

A large portion of mortgage lenders use the same software from Ellie Mae. Through this software, they are able to track the entire process, providing great industry insights.

According to the December 2014 Origination Insight Report from Ellie Mae, the average time to close a loan in 2015 took 49 days.

The average time to close a refinance dropped to 47 days, while the average time to close a purchase transaction increased to 50 days.

Obviously these are averages, so can some loans go through the process faster?  You bet.  Some slower?  Of course.

As a Loan Officer for 20+ years, by far the biggest delay I see in closings is cause by the client, by the client not providing requested documents to the lender in a timely fashion. By having standard documents ready to go up front, and responding to any document request from a lender in a timely fashion, the client can help achieve a smooth and successful on time closing.

Here are a few additional tips for a smooth home loan closing.


Avoiding TRID delays in your home loan closing

New government mandated lending rules, commonly known in the industry as TRID, have been reeking havoc across many home loan closings since they started in Oct 2015. The new rules essentially deal with mortgage lenders requirements to be accurate in their numbers and to provide accurate and timely disclosure to the client priot to the loan closing.

So how do homebuyers avoid last minute closing delays

TRID delays may be very real but, the bulk of the issues can be avoided by simply choosing the right Loan Officer.  If your you’re Loan Officer is accurate with the documents from the start, you can avoid many of the delay issues,” says Joe Metzler, a Senior Loan officer with Mortgages Unlimited in St Paul, MN.

A large percentage of Bank and Credit Union Loan Officers are not personally licensed, and should be considered more of a glorified application clerk versus a professional Loan Officer. This is because the rules do not require Loan officers at banks, credit unions, or mortgage companies affiliated with banks or credit unions to be licensed.

On the other hand, Loan Officers who work for non-bank mortgage companies, and for mortgage brokers are required to be personally licensed.  On average, the difference between a licensed and unlicensed Loan Officer can be dramatic.

Home Mortgage Loans in WI, MN, SDWhen working with a clerk, odds are the initial application will have disclosure errors that follow the file all the way to closing, ultimately resulting in a delayed closing.

Add  that to the TILA-RESPA disclosure rule change to be one of the biggest changes the industry has faced in years, and many companies are slow to be prepared to deal with the changes. This is especially true the larger the lender is. Software companies, lenders, mortgage industry vendors, and everybody else working on a deal are trying to figure out just what the CFPB now requires, which results in the delays.

Data from Ellie Mae, who provides mortgage loan software to a large portion of the mortgage industry has indicated the average time to close a home loan is clearly longer today than prior to the new rules, averaging 50 days to close a home loan.  This is an average of 10-days longer than it took one year ago.

Other data also shows the average home loan closing costs have gone up too, as lenders have had to hire more support personal to deal with the new rules.


Nationwide January Home sales dropped 9.2 per cent

Nationwide January Home sales dropped 9.2 per cent

Americans stepped back from buying new homes in January, as purchases plunged sharply in western states where prices are typically higher. The Commerce Department said Wednesday that new home sales fell 9.2 percent last month to a seasonally adjusted annual rate of 494,000. Most of the decline stemmed for a 32.1 drop in sales in the West. Sales also slipped in the Midwest, while edging up in the Northeast and South.New Construction Loans in MN, Wi, SD

There was a sharp fall in sales of newly-built single-family homes in January. The 9.2 per cent drop took sales to a seasonally-adjusted rate of 494,000 units according to data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

The National Association of Home Builders says that the dip follows a stronger-than-usual December and the underlying trend is positive that after an unusually high December reading, some pullback is to be expected.

The inventory of new homes for sale rose to 238,000 in January, which is a 5.8-month supply at the current sales pace and the highest level since October

Building a new home? Find new Constructions Home Loans in MN, WI, and SD here.

Side note: I always chuckle at these monthly reports.  They really have little meaning on a monthly basis.  The long-term trend is the more important view.