Over the past decade the time period it has taken to get a loan processed had dropped significantly. In the recent heady days of the real estate boom a good lender could process a loan in about two weeks or less.
Well, those days are over for two reasons. One is that most loans processed these days in the Silver Spring market are FHA, government loans. Traditionally these loans have taken a little longer than the conventional loans that we mostly saw during the recent boom. The other reason is that all loans are taking longer due to more restrictive guidelines and tougher appraisals.
Investors took a big hit from bad loans in the past few year and are watching loan applications more carefully. The FHA loan pipeline is clogging up a bit as a result. If you are selling or buying a home where an FHA insured loan is part of the contract then it is better if you plan on the loan taking up to six week to get approved. A lot of Realtors are still putting 30 days to settle in the contract that they are writing but I think this is overly optimistic these days. I am advising my clients to expect at least 45 days from ratification to closing.
Those of you who have been around long enough will remember a terrible period back in the late 1980s where it was taking FHA loans up to 120 days to close. We were caught in another boom market and the appraisal pipeline was so backed up that you just could not get one scheduled for at least 90 days. It is unlikely that we will experience that sort of delay this time around but do expect your loan to take a little longer to close.
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