If there’s one question most new homebuyers have, it’s ‘how long does it take to close the loan?’ Now if you are looking at a USDA loan, you’ve probably heard the myth that these loans take ‘forever’ to close. The good news is that they are wrong. It doesn’t take much longer than any other loan.
The one difference between the USDA loan and any other loan is that the USDA must approve the loan. After the underwriter approves it, the full underwriting package goes to the USDA. If the bank sends a complete package, though, this process only adds an estimated one week to the process.
There’s more good news to go along with it too. You can control how long it takes to close the loan. No, you can’t underwrite it yourself, but there are ways you can help speed the process along. We’ll help you understand them below.
Get a Pre-Approval to Save Time
One of the best ways to speed along your USDA approval and loan closing is to get a pre-approval. You want to do this step before you shop for a home, no matter what type of loan you have. It gives you an idea of what you can afford and how much a bank will lend you. It’s a waste of time to shop for a home before you know how much a bank will lend to you.
Once you get that pre-approval, it gets some of the preliminary work out of the way. The lender will verify your eligibility for the program and then your qualifying factors. They will look at your income, assets, liabilities, and credit score. They will have a good handle on what they need in order to process your loan. This way you know before you even sign a purchase contract what you need to give the lender.
Act Fast During Underwriting
After you get your preapproval and sign a sales contract, it’s time for your loan to go to underwriting. The underwriter will fully evaluate your application and all qualifying factors. He may ask for additional documentation. This is where you come into play. The quicker you respond with what he needs, the quicker your loan can get to the USDA.
If you let the request sit idle for a few days, your loan will end up at the end of the queue. You’ll have to wait for the lender to get back to your loan and underwrite it again. If he needs more documentation the second time around, it can delay things even further. This is why acting fast is in your best interest.
The Waiting Game Before You Close
Once you do everything on your end, you just have to wait for underwriting to be completed. The underwriter must wait for the appraiser to complete his report and for the title report to come back to him too.
Once the underwriter has everything, he can complete the USDA checklist and make sure the loan fits the USDA’s parameters. If it does, he can send the full package onto the USDA. This is when another obstacle can occur. If the underwriter doesn’t send a complete package, the USDA will not look at your loan. They will only accept everything all at once. In order to ensure this is the case for you, find a lender that is experienced in USDA loans. Using an inexperienced lender could lengthen your time to close.
Once the USDA approves everything, it’s time to get you to the closing table. The lender will arrange this with the title company. The closing usually occurs within a few days of the request though, as the title company is usually aware that a ‘clear to close’ from the USDA is on its way.
USDA home loans don’t take much longer than conventional or FHA loans to get to the closing table. It really depends on the speed of the lender and your response time. The more organized and in touch with the lender that you are, the better your chances of closing fast. Take your time when finding a lender. Look for one that is experienced in USDA loans but also that you work well with. This is a process that requires plenty of communication in order to get to the closing table fast.