After the appraisal, the next step is underwriting. The mortgage lender reviews the loan file to ensure that everything is in order, assesses the risk, and either approves or denies the application. Some borrowers might receive conditional approval, meaning that some item needs to be resolved or explained.
How long does it take after the appraisal to close? Mortgage underwriting and other closing procedures can take anywhere from 2 weeks to 45 days. On average, lenders tell borrowers to expect a 30-45 day window to finish processing everything.
More commonly, though, a home appraisal is being ordered by a lender as part of a residential real estate transaction. As such, the next step that will occur is the mortgage underwriting process.
The final step in the appraisal process is to consider and analyze the relevance of the approaches to value in relation to the subject property and the reliability, quality and quantity of the data used in the approaches to value.
Underwriting decision
Once the underwriter is satisfied with your application, the appraisal and title search, your loan will be deemed clear to close and can move forward with closing on the property.
If all goes well, the appraisal gets slipped into the pile of paperwork and the closing process takes one step forward. The next step is mortgage underwriting. The underwriter reviews the entire loan file to make sure everything is in order and that all the required documents have been submitted.
The reason lenders order the appraisal a few weeks into the underwriting process is to allow ample time to review the borrower's application prior to incurring the cost of the appraisal.
In most cases, appraisers do not know the loan amount when conducting a home appraisal. The loan amount is different from the agreed upon sales price. Appraisers most likely know the sales price because the standard appraisal forms require the appraiser to enter that information.
While it's always great for the property appraisal to come back higher than the amount you agreed to buy it for, this is no way affects the loan amount you need to qualify for, or the down payment you need to close on the mortgage loan. Both conventional and unconventional mortgage products offer similar requirements.
While the underwriting process is happening, the lender will order an appraisal, typically conducted by a licensed appraiser, to assess and evaluate the property a borrower wishes to purchase.
If the appraisal sets the home value at less than your offer amount, however, you won't get a loan that covers your offer price—even if you can put down 20% of the offer price and the lender has preapproved you for a loan that covers that amount.
A lender uses an appraisal not only to assess the value of the property, but also to determine such things as your interest rate, required down payment, and whether you will be approved for the loan.
You must obtain your initial closing disclosure three business days before signing your loan documents. Once you receive the disclosure, compare it with your original loan estimate to verify all terms. Should you encounter any uncertainties or discrepancies, promptly consult your loan officer.
It is technically possible to close on a home in 30 days, or even less, particularly if you are paying all-cash rather than getting a mortgage or dealing with a homebuying company or iBuyer. But in general, according to data from ICE Mortgage Technology it takes about 44 days to close on a home.
Step 5: The underwriter will make an informed decision.
The underwriter has the option to either approve, deny or pend your mortgage loan application. Approved: You may get a “clear to close” right away. If so, it means there's nothing more you need to provide. You and the lender can schedule your closing.
How long does mortgage underwriting take? Underwriting can take as little as a few days or as long as a few weeks. It takes place after you have an accepted contract on a home, but before closing.
There are many things that can hurt a home appraisal, such as owning a unique home and having outdated appliances, home systems and other structural issues. Anything in a home that is old, outdated or not functioning properly can directly impact the home appraisal and the overall value of the home.
Step 3: Measure performance
Performance that is expressed in numeric terms—for example, cost, quantity, quality, timeliness—is relatively easy to measure. Performance in the area of soft skills—for example, communication, customer service and leadership—is more difficult to evaluate.
Comparable homes or comps are one of the most important factors affecting appraisal value. An appraiser will take a close look at recently sold, nearby homes with similar bedrooms, bathrooms, updates and square footage to your home. The value of these homes can provide baselines for appraisal value.
Mortgage underwriting (30–60 days)
The mortgage underwriting process takes the biggest chunk of time when closing on a home. This is where lenders assess the risk of giving you money (in other words, how likely you are to repay the home loan you borrow).
Appraised prices rarely come in at below the asking price or contract price. However, when housing markets heat up, it's possible that appraised values may need a little time to catch up.
The title company will send all the documents to the lender for final approval. Once the lender has issued final approval the transaction is considered “funded.” Keys are then released to the buyer and proceeds are disbursed to the seller.