Why do mortgage loans take so long to close?

By on 11/27/2010 12:57:00 PM

Why does it take so long to get a final approval on your mortgage loan application? Whether you are buying your first home as a family or refinancing your existing mortgage to pay down high interest debt--at one time or another, many busy parents find themselves involved in the mortgage loan process. For many, the mortgage industry is a complicated and confusing one--leading to lots of questions and uncertainty for borrowers.

I addressed this common borrower question in my Examiner.com column this week--and wanted to share it here.

Have you ever wondered why it takes so long to close your mortgage loan after you submit that initial application? The mortgage loan process can turn into a lengthy struggle of paperwork, emails, faxes, and phone conversations. In some cases it can take so long to close a mortgage loan that borrowers lose interest because the time required outweighs the benefits of the loan.

What are five reasons the mortgage loan process can take so long?
Lack of Communication. There are many people involved in a mortgage loan transaction. Borrowers, loan officers, realtors, underwriters, processors, assistants, appraisers, escrow officers, notaries, closers, funders and account executives all often play a part in your mortgage loan approval. There could be up to 20 people working on your mortgage loan application. (And remember that those 20 people could be working on an additional 100-150 other applications at the same time!) There are many opportunities for someone to drop the ball, lose the lines of communication, and cause your application to slip to the bottom of the pile.

Lack of Organization. In this post subprime Alt A era, mortgage loans require more documentation than in the past. Investors in mortgage backed securities want evidence to back up your loan application, meaning that you will need to provide income verification documents, divorce decrees, child support documents, past credit letters of explanations, job gap letters of explanation, and whatever else the underwriter deems necessary to approve your loan. All of this paperwork can take time to locate if you are not organized—and even require resubmission if the recipient of your application is disorganized as well.

About Angela

Angela is a freelance travel writer and lifestyle blogger, blessed with 3 beautiful daughters, 5 moody cats, 1 spoiled dog, and 1 very supportive husband.


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