Your loan application and financial documents must pass underwriting to gain full loan approval.
FHA loans are in high demand among first-time homebuyers and homeowners with minimal equity in their home who need to refinance. The government-backed loans protect participating lenders by promising to reimburse them if borrowers default. Flexible credit guidelines and a down payment requirement of 3.5 percent put FHA loans in high demand. Despite a high volume of applicants, an FHA lender can typically underwrite a loan package, which includes a complete application and all supporting financial, employment, credit and property information in a matter of days to weeks.
The lender's underwriter reviews pay stubs, tax returns, bank statements, verifies employment, analyzes your debt, the appraisal report, title report and escrow documents during underwriting. The time for processing this paperwork can vary greatly among lenders and individual files, usually 5 days to 25 days, the Homebuying Institute
says. Underwriters usually request more documents from the borrower to clear up discrepancies or uncertainties about finances or the property. As such, the underwriting stage usually involves at least two separate requests for paperwork before your loan is completely approved and ready for final loan signing.
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