You’re at that point where you're wanting to get approved for a VA loan or maybe you’re in the process and wondering, “How quickly can a VA loan close?” The simple answer is, you can close a VA loan in less than 2 weeks. However, it’s not as simple as that. There are a few factors that can affect the time it takes to close a VA loan. Are you in the middle of the process and wanting to switch lenders? How big is the lender you’re thinking about using? Is it a Bank, mortgage company or broker? Do you have a VA appraisal and if not, what is the VA appraisal turn times in your state? I’ll touch on each of these briefly here.
Factors that Affect How Quickly a VA Loan can Close
VA gives appraisers anywhere from 7 to 14 business days in most states. So you can see where in some states it can take up to 10 full days with holidays and weekends included. Yet others it could be nearly 3 weeks before you receive the appraisal. If you’re in Alaska or Montana, expect it to take close to a month or more. Find your VA appraisal turn times here.
If you feel you need to switch lenders for any reason, you will not need a new appraisal if you have one already. The appraisal you currently have goes with you to your new lender. Now you can see right away where this can cut down weeks. Find a lender that can approve your VA loan in 3 days or less, and you won’t have a problem closing in less than 2 weeks.
Veterans and service members have been lead to believe a VA loan takes 40 to 60 days to close. Well, for some lenders it does. However, it couldn’t be further from the truth. I’ve had VA loans close in less than 2 weeks when the veteran has made the switch.
So why does it take nearly 2 months to close a VA loan for some lenders?
Having originated VA loans since 2002 for over a half dozen lenders including brokers, mortgage companies and banks, I can say there are countless reasons why it could take so long to close a VA loan. True story – one lender that wasn’t an actual bank ran out of credit line before the end of the month. All loan closings had to be delayed until the loans were sold and credit line paid back.
That’s an extreme situation though and one you probably won’t ever run into. Here are the top 3 reasons a VA loan can take 40 to 60 days to close with some lenders:
Quite often the process has bottlenecks the lender hasn’t worked out. The more bottlenecks there are, the slower the line goes of course. The more loans that pile up, the greater the delays.
Advertising can do a lot for business. Obviously the more a lender advertises online, on television or on the radio, the more business they will get. If they haven’t prepared their process for the influx of business, you start to experience bottlenecks. These are points in the process that cause delays. When multiple loan files have to touch one person and suddenly, the number of files that reach that person doubles, you can imagine what that does for every other file that follows. Everything stacks up. So if you see a lender all over the internet or television, get ready for a long ride. Also, off topic, watch out for closing costs. Someone has to pay for the advertising.
Brokers have a great purpose in helping veterans. They have lenders that provide loans to veterans with credit profiles other lenders might not approve. In these cases, veterans should expect their loans to take a little longer as there are more details and paperwork to tend to on damaged credit loans.
Yet why would a broker take longer to close a good credit VA loan versus a bank? The answer is, they send their loans off to big volume lenders to underwrite. These single lenders underwrite for thousands of brokers every month. Volume plus bottlenecks equals 60 days easy.
If you’re wanting to close a VA loan in less than 30 days, it can be done. You may not know if there are bottlenecks in the process but if you pay close attention to how much advertising the lender does or if it’s a broker or bank, you’ll have a better idea.