Agents frequently ask us how long it takes to apply for a loan, and how long it takes to get pre-approved (so they can share the info with their clients).
Our answer is always that “it depends” b/c there are so many variables, but that it takes much less time than it did in the “olden days” of 2016.
When I first got in the business in 1994, the application process was brutal b/c everything was in paper form, digital document transmission was a mere pipe dream, and applications were often hand-written.
Automation has improved markedly over time of course, as most mortgage banks went fully digital over the last ten years and effective point of sale/digital loan applications surfaced over the last five years.
So, how long does it take now to apply for a loan and then get pre-approved?
APPLICATION QUESTIONS TAKE 10 TO 15 MINUTES
It takes about 10 to 15 minutes to answer all of the questions on a loan application digitally with an effective point of sale application like Blend.
This is the case even with the addition of 94 new data points in the new Uniform Residential Loan Application that I blogged about yesterday.
APPLICATION QUESTIONS + ALL NECESSARY DOCUMENTS CAN TAKE 30 TO 90 MINUTES
Just filling out the loan application is the easy part.
What really takes time is finding and then copying and/or uploading all of the required documentation, including tax returns, pay-stubs, driver’s licenses, and bank and investment account statements.
This process can add anywhere from 30 to 90 minutes to the total time necessary to apply for a loan.
Applying for a jumbo loan can take much longer than applying for a conforming loan b/c jumbo lenders usually require much more documentation, particularly with respect to asset statements.
PRE-APPROVALS CAN TAKE 1 TO 5 HOURS
A full pre-approval can easily take up to 3 hours to complete.
This is b/c our team has to do so much careful verification work, including very careful tax-return reviews, income calculations to the dollar, credit report reviews, asset verifications, employment verifications, DU runs, and much else.
As I mention often, people outside the mortgage industry have no idea how much goes into a full pre-approval.
We often get high-end self-employed borrowers with very complex employment and financial structures who can require as much as five hours for a pre-approval.
I should add though that some conforming loan pre-approvals for clean files with W2 wage-earners can be done in under an hour, but these files are not as common as one might expect.
TURN-TIMES FOR PRE-APPROVALS: 1 TO 3 DAYS
Our team is now quoting turn-times of 1 to 3 days for complete pre-approvals.
We used to quote 24 hours at most, but b/c the market is so hot, b/c we are getting so much business, and b/c full pre-approvals take so much time, our turn-times sometimes get pushed out to several days.
Our turn-times are entirely dependent on the volume of loan applications we get daily.
While it is not something we can control, we are continually adding more staff and virtual assistants to our team and implementing better tech to manage the surges in business.
PRE-QUALIFICATIONS CAN BE DONE IN 1 HOUR OR LESS
We sometimes offer pre-qualifications instead of pre-approvals under the following circumstances:
- The buyers only need to know what they can roughly afford and a pre-qualification letter so they can start home shopping immediately;
- Our staff is inundated with pre-approval requests and buyers do not have the time to wait for a full pre-approval;
and/or - The buyers are not in a hurry to make offers, so there is no reason to do a full pre-approval upfront.
Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167
