Mortgage 101

How Long Does a Full Mortgage Application Take?

By Lauren Caggiano on March, 31 2022
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Lauren Caggiano

Lauren Caggiano is a Fort Wayne-based copywriter and editor with a nerdy passion for AP Style. In her free time, she enjoys volunteering, thrift shopping, fitness and travel. Learn more on her website:

You’ve spent hours browsing listings, going on open houses, and researching the types of mortgages products available to you. But before your dream becomes reality, there’s a lot of paperwork and due diligence on your part.

So how do you go from a daydreamer to happy homeowner? A mortgage approval enters the equation, of course. Here’s what you need to know about the mortgage underwriting process so you can know what to expect.

What is mortgage underwriting?

You’ll encounter your share of jargon as you go through the application process. Mortgage underwriting is one important term and it refers to what happens behind the scenes once you file your application. Put simply, it’s the time when a lender takes an in-depth look at your creditworthiness and financials to assess whether you’re a good candidate for a loan.

That said, here are the steps in the mortgage underwriting process and what you can expect from each.

Step 1: Complete your mortgage application.

Once you complete the application the lenders use the information you disclose to determine if you’re eligible for a loan. As the circumstances will vary for each applicant, the exact documents you’ll need may vary. However, you can expect to provide the following, at a minimum:

● ID and Social Security number
● Pay stubs from the last 30 days
● W-2s or I-9s from the past two years
● Proof of any other sources of income
● Federal tax returns
● Recent bank statements or proof of other assets
● Details on long-term debts such as a car or student loans
● Real estate property information/Accepted Offer to Purchase (signed by all parties)

You can start your application on your own or request the assistance of your mortgage loan officer. Within three business days of submitting your complete application, you can expect to receive a Loan Estimate (LE) showing your estimated closing costs.

Step 2: Sit tight during the review process.

From here, a loan processor will assemble the necessary documents for the underwriter. A mortgage underwriter plays an important role, as they’re the person who has the authority to approve or deny your loan application.

In considering you for a potential loan, they review your financial picture which includes such aspects as credit history, income, and any outstanding debts. When in doubt, you’ll want to be concerned with the three C’s of underwriting — credit, capacity, and collateral.

The underwriter will review your credit report to see patterns. For instance, do you make payments on time? Have you defaulted on a loan? What’s your credit history length? Credit mix? Recent credit? They look for data points that will help them predict your ability to pay back the loan.

The underwriter will review your employment, income, debt, and assets. You can expect your savings, checking, 401k and IRA accounts, tax returns, and other records of income, as well as your debt-to-income ratio, will be under scrutiny. They want to see that you, and any co-borrowers, have the means to make payments now and in the future.

Taking into account the current market value of the property, the underwriter will make sure it can function as ample collateral for the loan. This assures the lender that they can recover the unpaid balance in the case you stop making payments. The underwriter may use an appraisal or other form of valuation to determine a number.

Step 3: Get an appraisal.

This step is necessary to confirm the home’s value aligns with the purchase price. A property’s price tag is based on the size, location, condition, and features. The value of comparable homes in the neighborhood and market can also be used to come up with this figure.

You should know that an appraisal protects both buyer and lender by ensuring you only pay what the home is worth. If the appraisal reveals that the home is worth less than the asking price, you may have to prepare yourself for some scenarios. For instance, you may need to bring more money to the closing, negotiate a lower price, or walk away altogether. The lender wants to be sure that your loan doesn’t exceed the property’s value so that in the event of default, they can recover any losses.

Step 4: Protect your investment.

Both title insurance and homeowner’s insurance offer peace of mind. Regarding the former, a key provision is a title search that ensures there are no liens, claims, unpaid taxes, judgments, or unpaid HOA dues on the property. Once this is taken care of, the title insurer will issue an insurance policy to validate the accuracy of the research.

Homeowner’s insurance is also another prerequisite. Your lender will ask for a copy of the insurance declaration page and either a paid receipt or an invoice that indicates the last year of coverage.

Step 5: The underwriter will make an informed decision.

This is when things start to get interesting. The underwriter has the option to either approve, deny, or pend your mortgage loan application. Here’s a look at what these terms mean:

Approved: You may get an all-clear. In this best-case scenario, there’s nothing more you need to provide. This means you and your loan officer can schedule your closing. However, if your approval is conditional, you’ll need to provide something more. That might be a signature, tax forms, or prior pay stubs. The process may mean a slight delay but don’t sweat it. If you’re prompt in responding to any requests, you should be in good shape.

Denied: If an underwriter denies your mortgage application, you’ll need to understand why before you make any bold moves. There are many reasons for the denial of an application, such as having too much debt, a low credit score, or not being eligible for a particular loan type. Once you have this intel, you can take steps to address the issue at hand.

Decision pending: If you don’t provide enough information for the underwriter to come to a determination, they may suspend your application. For example, if they can't verify your employment or income, this could create a snafu. It doesn’t mean you can’t get the loan per se, but you’ll need to furnish further documentation for them to give you a clear answer.

Step 6: Get ready for closing.

Congratulations — you’ve made it so far! At least three days prior to closing look to receive a Closing Disclosure (CD) from your lender. This important paperwork includes the loan terms, your projected monthly payments, and your final costs. Review this with a fine-tooth comb, especially the funds you need to bring to closing. If you have any questions, ask your lender for clarification.

This is also when you make arrangements for your down payment and closing costs. Plan to bring a photo ID and a cashier’s check for your closing costs with you to your closing. At your closing, you’ll sign the final paperwork, pay any outstanding closing, and perhaps most importantly, get the keys to your new home.

How long does mortgage underwriting take?

After reading this, you’re probably left with a burning question: How long does mortgage underwriting take?

Each situation is different, but the process can last anywhere from a few days to several weeks. At Ruoff, we pride ourselves on efficiency. Our average is 18 days. According to Ellie Mae, a data firm that processes mortgage applications, the average time to close on a mortgage was 51 days in June 2021.

Errors or omissions on your part may lead to delays. Regardless, it’s best to be very responsive to requests for information and be open and honest. If you need more time to gather the requested documents, let your mortgage loan officer know as soon as possible. Speaking of loan officers, our professionals are here as a ready resource. You can connect with one by clicking here.