The best time to apply for a mortgage
Currently, mortgage rates are at an all-time low. However, when it comes to the ideal time for applying a mortgage, there is a lot more to consider than just market conditions.
One of the most important factors when it comes to your mortgage experience is service. In turn, service is heavily influenced by timing. Read this article to learn more about the best time to apply for a mortgage.
About the Mortgage Industry
In the mortgage industry, every mortgage lender has a monthly business cycle that is very regular. This cycle is largely driven by compensation. Monthly production numbers come down to management overrides, loan officer commissions, and processor bonuses.
However, it’s not simply compensation. If not signed in the same month that it is drawn, a mortgage note becomes useless. Borrowers also play a role because they typically want to close near the end of the month to minimize prepaid interest, which can boost out-of-pocket costs.
At the beginning of the month, mortgage lenders focus on acquiring new loans. During the middle of the month, mortgage lenders focus on collecting trailing documents and preparing loans for the end of the month. The end of the month is when mortgage lenders focus on closing as many loans as they possibly can.
Based on the mortgage cycle, the best time to begin a new loan application process is during the few days of the month. The beginning of the month is when lenders are most desperate for new business.
They’ve finally gotten past the push at the end of the month to close as many loans as possible, and they are looking forward to a new month. Mortgage lenders will respond to your phone calls more quickly and will review loan terms and options with you.
As you probably were able to guess, the worst time of the month to apply is during the end of the month. This is when mortgage lenders are working as much as possible to close loans.
While your mortgage lender may very well want to work on new applications, they will need to focus on closing loans to meet their monthly targets. Therefore, you can expect not to receive as much attention or timely responses if you apply at the end of the month.
When you apply, follow these steps to ensure the process goes as smoothly as possible:
1. Get organized
Organize your financial documents so that you can provide them to your lender as quickly as possible.
2. Submit a complete application
Be sure to provide a complete application with all the required documents so that your processor can move your loan to the underwriting stage quickly.
3. Provide detailed information
Provide as much information as possible. Underwriters tend to be risk-averse, so you don’t want to give them any reasons to reject your application.
4. Anticipate delays
The next thing that you should do is include “buffer” days in your rate lock. The last thing you want to do is lose your rate due to delays that are not your fault.
Overall, the best time to apply for a mortgage with FHA mortgage lenders is at the beginning of the month.