Recently, I applied for a mortgage. I’m buying a house, and I needed to borrow to be able to afford to do so — just like most people do.
I have always found getting a home loan to be a huge hassle that takes tons of time. So this time, I kept track of exactly how long I spent on the process. It ended up taking me just over six hours.
Here’s how that breaks down, so you can have a better idea of what to expect when you’re applying for a loan of your own.
I wanted to make sure I was getting the best possible interest rate on my mortgage, so I spent a good amount of time comparing loan options and getting mortgage quotes — 55 minutes to be exact.
Many mortgage lenders provide quick online quotes, but you still need to provide some basic financial information to get them. Since I got several quotes from banks, brokerage firms, and online credit unions — and since I wanted to compare costs on different kinds of loans including 30-year fixed-rate mortgages and adjustable-rate mortgages — it took me a while to go through this process.
I also made a spreadsheet comparing fees, interest rate, and total borrowing costs for each loan, so I could do an apples-to-apples comparison.
More: Check out our picks for the best mortgage lenders
While it was time consuming, it was also worth it. The interest rate you pay on your home loan can make a huge difference in monthly payments and total borrowing costs. In fact, going from a 7.00% rate to a 7.50% rate could cost you an extra $33.91 per month and $12,208.32 in interest costs per $100,000 borrowed over the life of the loan if you take out a 30-year mortgage.
If you’re shopping for a loan, be sure to allow yourself time to get these online quotes and really consider which lender will provide the best overall loan terms.
Filling out an application: 40 minutes
Once I had decided on a lender, it took me about 40 minutes to actually complete the application. That’s because I had to provide a good amount of information about my finances and about the home I was buying. It took a while to look up all the numbers and make sure I got everything right.
If you want to make this process easier — if not necessarily faster — you may want to work with a lender offering in-person or telephone customer service to help. Working with someone can make the process simpler, although if you have to see them in person, it may take more time in the end once you factor in time to get to their office.
Gathering documents: 2 hours
My lender — like most lenders — required a good amount of financial information to be submitted when I applied. This included:
- My real estate sales contact for the house I was buying and for the home I’d recently sold
- Three months of bank statements
- Personal and business tax returns
- Other asset statements, such as brokerage account balances to show I have money in reserve
I had to gather all of this paperwork, and it took two hours to put it all together, scan documents I only had paper copies of, and submit everything.
It’s best to start this process early, because you’ll need many of these forms to get pre-approved and will definitely need them for final approval. I created a folder on my computer desktop to collect all of the forms, and you may want to do the same.
Responding to underwriter requests: 2.5 hours
Finally, responding to requests from the underwriter took me 2.5 hours. An underwriter reviews the loan documents after pre-approval to assess the risk for the lender. They want all the i’s dotted and t’s crossed, and they’ll likely ask for things you didn’t submit.
In my case, I had tons of requests because I’m self-employed and we own businesses in different states. I had to get a letter from my CPA about my business funds, provide an occupancy letter detailing what house I planned to live in, and more. It felt like it took forever.
Once you’ve submitted your forms, don’t assume you’re done. Until the underwriter signs off and you’re clear to close on your loan, you may still have work to do.
If you’re applying for a home loan, now you have a better idea of what to expect. It may take you less time — especially if your financial life is simpler than mine — but it could also take you more. So, do what you need to set yourself up for success (like assembling documents in advance) and prepare to be in this for the long haul.