Mortgage Closing Cycle Time

Mortgage Closing Cycle Time

KPI Details

Mortgage Closing Cycle Time is a vital mortgage lending KPI that measures the average number of days required by the institution to process and close a mortgage. This KPI is important to both internal operational performance, and the overall mortgage lending customer experience. Extended closing cycle times (i.e., "down to the wire") are commonly cited by borrowers as a major source of frustration during the origination process. Several common factors may extend loan closing cycle times, including lack of transparent loan document checklists, complex or poorly communicated loan application forms and requirements, many separate underwriting touchpoints (i.e., underwriter must request documents repeatedly from borrowers, loan officers, processors, etc.), and a general lack of clarity as to where the loan currently sits within the origination process. Extended mortgage cycle times not only reduce organizational capacity, but can greatly diminish service levels and lead to high borrower drop out rates (i.e., low conversion rate).

KPI Definition

The average number calendar days required for the institution to process, close and fund (i.e., originate) a mortgage loan, from the time the loan application is received until the mortgage has been closed and funded by the institution.

KPI Calculation Instructions Mortgage Closing Cycle Time?

Two numbers are used to calculate this KPI: (1) the sum of time to close (i.e., the difference of application date and the close/fund date) for all mortgages being examined, and (2) the total number of mortgage loans closed and funded (within the group being examined). A closed loan is considered a mortgage loan that has been funded by the institution; do not include loans that have not yet been formally closed in the numerator (cycle times) or denominator (volumes) for this calculation. Include both business and non-business days in the numerator for this calculation. Include only new mortgages and refinances in this calculation (i.e., do not include home equity lines of credit or modifications); in most cases, new mortgages and refinances should be analyzed separately for this KPI.

KPI Formula :

(Sum of Time to Close for All Mortgages) / Total Number of Mortgage Loans Closed