Why mortgage approval times are stretching longer

Mortgage approval times are a source of frustration for many homebuyers. The process of securing a mortgage loan has always been known to be lengthy, with paperwork, credit checks, and various other verifications to be completed. However, in recent times, mortgage approval times have stretched even longer, leaving many potential homeowners wondering why it is taking so long. In this article, we will delve into the reasons behind why mortgage approval times are stretching longer, and what can be done to speed up the process.

The Impact of COVID-19

The COVID-19 pandemic has caused widespread disruption and challenges across all industries, and the mortgage industry is no exception. The pandemic and the resulting economic uncertainty have caused lenders to tighten their regulations and become increasingly cautious about who they lend to. This has resulted in longer mortgage approval times, with lenders conducting more thorough checks and assessments to ensure they are making sound lending decisions.

Increased Demand in the Housing Market

Despite the challenges brought about by the pandemic, the housing market has seen a surge in demand. With record-low interest rates and more people looking to move to larger homes to accommodate remote working, the demand for mortgages has risen significantly. This increased demand has put immense pressure on lenders, leading to longer approval times as they work through a higher volume of applications.

Complexity of Paperwork

The mortgage application process involves an extensive amount of paperwork, and any errors or missing documents can significantly delay the approval process. With remote working becoming the new norm, it has become more challenging to get all the necessary paperwork in order and submit it within a reasonable timeframe. This has led to delays in the approval process, as lenders cannot move forward with incomplete applications.

Lack of Lender Capacity

The surge in demand for mortgages has also highlighted a lack of capacity among lenders. The sudden increase in applications has put a strain on their resources, with some lenders struggling to keep up with the demand. This has resulted in longer approval times, as they take on a heavier workload with limited resources.

The Appraisal Process

Another factor contributing to longer mortgage approval times is the appraisal process. With high demand in the housing market, home values have also seen an uptick, making it difficult for lenders to determine the true value of a property. This has resulted in more extensive and thorough appraisals, which can add several weeks to the approval process.

What Can Be Done?

So, what can homebuyers do to avoid the frustration of long mortgage approval times?

Prepare Your Documents in Advance

As mentioned earlier, incomplete or incorrect paperwork can cause significant delays in the approval process. To avoid this, it’s essential to prepare all the necessary documents in advance and ensure they are accurate. This will help speed up the process and ensure a smooth approval process.

Act Quickly

If you’re in the market for a new home, it’s crucial to move quickly. With demand soaring, homes are selling fast, and if you’re not prepared to act quickly, you could miss out on your dream home. This means getting your financing in order and submitting your mortgage application as early as possible.

Work with a Mortgage Broker

A mortgage broker can be a fantastic resource for anyone looking for a mortgage loan. They have access to a wide range of lenders and can help you find the best loan for your needs. They can also help you navigate the complex paperwork and ensure everything is in order before submitting it to the lender, potentially speeding up the approval process.

In conclusion, mortgage approval times are stretching longer due to a combination of factors, including the impact of the COVID-19 pandemic, increased demand in the housing market, and lack of lender capacity. While these may be frustrating for homebuyers, understanding the reasons behind the delays and taking proactive steps can help speed up the process. With the right preparation and assistance, you can still achieve your dream of homeownership in a timely manner.