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The process of closing on a mortgage takes time. Not only does your lender need to first review the documentation you provide, but your loan then needs to go through underwriting, where an expert verifies that your financial data is acceptable.
Furthermore, before you can close on a mortgage, your lender will need to do a title search to ensure that the home you're looking to buy is free and clear of liens or anything else that could compromise its sale. The home will also need to go through an appraisal, where its value is assessed to make sure it's worth enough to cover the mortgage amount in question.
As you might imagine, all of these steps mean a mortgage won't close overnight. But in some cases, it's more than feasible for a home loan to close in 30 days.
That wasn't the case in November, though. The average amount of time it took to close on a mortgage was 55 days, according to Ellie Mae's Origination Insight Report. That's one day longer than it took in October, on average, and it also means many anxious buyers may have been subject to frustrating delays.
Why delayed mortgage closings are problematic
The longer it takes to close on your mortgage, the longer you'll need to wait to move into your new home. That could be a problem if you're running up on an expiring lease or have another reason why you need to move sooner.
For example, if you're relocating for a job you're supposed to start in a month, but it takes 55 days to close on your mortgage, you'll either need to push out your start date or find temporary housing until your loan is complete and you can actually take possession of your new home.
What's more, a delayed closing could put you at risk of losing out on the mortgage interest rate you lock in initially. You can generally pay a small fee to lock in your rate for a preset period of time -- you might get a 30-day lock, a 45-day lock, or longer. But if your rate lock expires before your loan is finalized, you could get stuck paying a higher amount of interest on your mortgage, or have to pay another fee to extend your rate lock.
What to do if your mortgage closing is delayed
A big reason why mortgages have been delayed lately is volume. Low interest rates are fueling demand for new home purchases and refinances, and mortgage lenders are incredibly busy trying to keep up with everyone. If your mortgage closing is delayed on your lender's end, there's probably not much you can do. But you can help move the process along by promptly providing all of the information your lender asks for -- both at the time of your application and throughout the process.
Your lender may, for example, decide it needs additional verification that you're gainfully employed even if you provided a few months of paystubs along with your application. The sooner you submit that information, the sooner your loan can be completed.
Frustrating as it may be to have your mortgage closing delayed, at a time when home loan volume is high, it can happen. Prepare for that possibility and try to plan for it in advance. For example, you may need to secure backup housing in the event of a delay, or pay more money to extend your rate lock. But ultimately, the more prepared and flexible you are, the less stressful a lengthy closing will be.
