Why your mortgage loan application might be delayed

With interest rates being at historical lows more and more people are applying for mortgages and nationally mortgage banks and lenders across the country are experiencing unprecedented amounts of volume, expect delays. If you’re purchasing or refinancing a home follow is what you need to understand and be aware of…

The coronavirus pandemic has created a national situation in which mortgage banks and lenders are experiencing longer timelines, and delays for not only refinancing but also purchase money applications as well regardless of what you might otherwise be told.

Low mortgage rates drive mortgage volume

In recent years mortgage rates have come down multiple times and are now at such historical levels. These lows are presenting opportunities where people are looking at their mortgage statement at 3.5 or higher on their 30-year fixed and they’re thinking themselves “Gosh I could refinance for 2.5%.”

If you’re refinancing your house it’s completely realistic to anticipate a 60-day close of escrow for most mortgage companies, some are even taking longer. The rate at which new applications are coming in is faster than most mortgage banks’ ability to close those loans hence delays. This is due to a sheer amount of loan volume followed by many appraisers also full their pipeline impacting their timelines which parlays everything else. It is realistic to expect appraisals to take anywhere on average from two to three weeks depending on the type of property, scope of work involved, and location. It’s also not uncommon to have difficulty for the appraisal management company. The AMC as it is called in the lending world has a delay in finding an appraiser to accept the job, only to have the appraiser come back and ask for more money.

Purchase loans also are affected. You might have a 30-day close of escrow for example 20 days for an appraisal contingency and 20 days for a loan contingency, you might have the best combination of cash credit and income, 40% down, and a 780-credit score and have a perfect financial picture and your file could be delayed. Your loan probably wouldn’t be delayed in the mortgage underwriting process although it could be depending on what mortgage company you go with and their volume constraints as it relates to the totality of the market.  Please if you are purchasing a house and your escrow gets delayed it’s not the end of the world, it is inconvenient granted, however, if you still close on the house at the end of the day that’s really all that matters, and of course, getting an affordable mortgage payment.

A common best practice to successfully navigate these waters is to breathe, the escrow will close, be patient, be kind and try to be understanding as everyone in the mortgage industry right now is working as hard as they ever have given these unique times.

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