As financial technology continues to take the mortgage industry by storm, LendingTree indicates homebuyers are now taking a considerably shorter time to close on their home loans.
According to the company’s recent analysis, homebuyers are now getting into their homes 11 days faster than they were in 2018.
This comes as no surprise as the company revealed that the time to close on new purchase transactions has been steadily declining since 2017.
In order to determine this, LendingTree conducted a 3-year study that detailed the nation’s average closing times. According to the study, the time it takes to close on a new purchase transaction has fallen from 74 days in 2017 to just 40 days in 2019.
And although a number of factors have attributed to this decline, the company notes that lower mortgage volumes have played an important role in the regression.
“Some of the decline can be attributed to lower mortgage volumes, as refinancings have been on a downward trend,” LendingTree writes. “But increased digitization is also playing a major role.”
Notably, LendingTree also revealed that while closing times have shortened across the board, they still vary based on origination type.
“Closing times vary based on the characteristics of the mortgage type and borrower,” LendingTree writes. “Having a higher credit score can knock a few days off: Purchase borrowers with scores above 760 averaged 38 days in 2019 compared with 45 days for those below 720.”
Additionally, the report shows that loan amounts also affect closing times, as lower amounts tend to take a shorter time to close.
“Loans under $150,000 averaged 47 days compared with 39 days for those above the conforming limit of $484,350 in 2019. Why? Higher loan amounts are typically being made to more credit-worthy borrowers,” LendingTree writes. “Lower-priced homes may be in some form of distress or have some type of damage; lenders thus may require more extensive appraisals to better estimate the home’s value and this adds time to the process.”