USDA loans have the reputation of taking ‘forever’ to close. That’s not the case, though. They don’t take nearly as long as many people think. Yes, the USDA does have a say in whether or not your loan gets approved, but as long as you choose the right lender that’s experienced in USDA loans, it shouldn’t take long.
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The First Step
We recommend that you get pre-qualified for a USDA loan before you even look for a home. This cuts out a good chunk of time in underwriting. The underwriter qualifies you and your co-borrower for the loan before you even find a property. All that’s left is to qualify the property that you find and re-verify your qualifying factors.
You can get pre-qualified for a USDA loan as much as 60-90 days before you sign a contract. If you don’t find a home within that time, USDA lenders can easily update your information and extend your pre-approval. Taking this step saves a lot of time when it matters most – once you find a home.
Once you find a property and sign a contract, the lender must order an appraisal from a USDA-approved appraiser. The appraisal process can take a few weeks. It depends on the appraiser’s workload and the seller’s schedule, as the seller needs to be there to let the appraiser into the home.
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The appraiser will walk through the property, both inside and out. He will take pictures and measurements. He uses the information he gathered from the home to create the appraisal report. The appraiser will include the measurements and comment on the home’s condition. He will also include information on other homes in the area that sold within the last few months that are of similar size and features of the subject home.
Once the appraiser turns the appraisal report over to the lender, they process it. The lender first looks at the home’s value. Is it worth at least as much as you agreed to pay for it? Next, the lender looks at the home’s condition. Does it pass all USDA requirements? If the property passes all of the requirements, the lender can move onto the next step, which is re-verifying your information and moving you onto the closing.
The USDA’s Role
Once the lender is done approving your loan, they must send a complete package to the USDA. This is what may hold up the process. The USDA typically takes around two weeks to process a loan. The exact time depends on the USDA’s workload in your region as each region has its own office.
It’s important to work with a USDA –approved lender that has plenty of experience in the process. The USDA requires a complete package from the lender. If they look through your loan and see that not everything is there, they’ll send it back to the lender, putting your loan at the back of the line again.
If you have a lender that knows what they’re doing though, they will send a full package and receive an answer from the USDA in a short amount of time. This makes the USDA loan just as accessible as any other loan on the market. Just as is the case with any loan, having all of your documents ready for approval and responding to the loan officer’s requests right away will help you get the most out of your loan.