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Whether you’re a first-time home buyer or a seasoned pro in the real estate market, it’s common to have questions about the closing process timeline. So, if the question at the top of your mind today is, “How long does closing on a house take?” the answer is (and we’re truly sorry for this): It depends.
Many home buyers can expect closing to take roughly 40 days. However, certain situations can speed up or slow down the process. To help you plan, here’s a deep dive into the home closing journey, including common steps, delays, and what you can do to keep the process moving.
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Current data from ICE Mortgage Technology shows the average time between making an offer and closing day is 43 days for purchases and 42 days for refinances. But why so long? Well, the closing process is more than signing papers and grabbing your shiny new keys — and that’s a good thing.
See, the entire closing process is about protection — for the buyer, seller, and the companies at risk if you don’t pay your mortgage. These include your mortgage lender and the title company.
Speaking of mortgage lenders, the time it takes to close on your house can vary depending on the type of loan. For instance, a VA loan can take 40 to 50 days, and an FHA purchase loan takes roughly the same time. However, some mortgage lenders promise speedy closing timelines, as fast as seven to 10 days in some cases. The fastest closing timelines are typically when the buyer pays cash and can skip the appraisal process.
Your best bet? Budget for a 45-day closing process, from accepted offer to closing day. A faster process will be a happy surprise, and a slightly slower one (which we’ll cover in a minute) could feel less frustrating.
Yahoo tip: Looking for mortgage lenders with fast closing times? Read Yahoo Finance’s Better Mortgage review and Rate (previously Guaranteed Rate) mortgage review.
Most buyers — that is, those taking out a mortgage — will experience the same steps when closing on a home. Remember the idea that closing is about protecting everyone in the real estate transaction? These steps ensure that the buyer, seller, and lender dot the i’s and cross the t’s. Here are typical steps you can expect to encounter on your way to closing.
The home inspection process allows buyers to hire a professional to inspect the home’s physical integrity. Issues found during the process can often be negotiated with the seller, where they can either repair the issue or reduce the selling price. If a seller refuses to repair or reduce the price to compensate, buyers may decide not to buy the home. After all, no one wants a surprise fixer-upper.
The home appraisal process assesses the property’s value by an independent third party. It ensures that the bank isn’t lending more than the property is worth and that buyers don’t pay more than the fair market value for a home. If the property sells for more than the appraised value, buyers will need to come up with the difference between the sale price and the appraised price at closing.
Your title company performs much of the work that ensures a home legally transfers from seller to buyer. These companies perform a detailed title search to ensure that you’re getting a home with a clean title — one where no one else has legal claims to the property. They also offer buyers title insurance that protects them if someone comes forth in the future and claims they have a legal right to the property (which is rare).
Even if you’re preapproved for your mortgage, your lender could have additional documentation requirements as you head toward the closing table. During the final mortgage underwriting process, the lender generally re-verifies your income and financial information and that your home qualifies for financing with your chosen mortgage.
Homeowners insurance protects buyers and lenders in case of home damage. These policies, which are required if you have a mortgage, protect buyers if their home or land is damaged by a covered event — much like your car insurance protects your car. You’ll have a set premium and deductible, and your mortgage payment often includes the premium, so you have one streamlined payment each month.
From the lender side, homeowners insurance protects them from the same damage. For instance, say a massive storm sends a tree through your roof. If you abandon the house and quit paying your mortgage, the lender won’t be able to sell the home for what it’s worth without making the necessary repairs.
While your homeowners insurance premium is usually rolled into your monthly mortgage payment, you can always choose your insurer. During the closing process, you’ll need to select the amount of coverage — enough to cover the structure of your home and its contents — and an insurer. You can compare quotes from different companies, choose the best policy, and then your insurer will work with your title company and lender to attach the policy to your mortgage.
Read more: What homeowners insurance doesn’t cover
Before you sign on the dotted line at closing, buyers take one last look at their home-to-be. During the final walkthrough, you can verify that agreed-upon repairs have been made and that everything included in the home’s purchase price is actually in the house. This includes appliances, any negotiated furnishings, and window treatments.
The walkthrough protects buyers from unscrupulous sellers who may not hold up their end of the bargain. Again, this is a rare occurrence. In most cases, you can think of the walkthrough as your smile-inducing “sneak preview” of your future home.
7. Closing and funding
Once your mortgage lender says you’re A-OK to close, you’re headed to the closing table. At closing, the title company ensures that all parties meet their financial obligations and that the required legal documents are ready for the buyer and seller to sign. Once all parties complete the final paperwork and you pay the closing costs, you get the keys and your lender funds your loan. Voilà! You’re a homeowner.
As you can see, closing on a home has more than a few steps. Closing delays can happen due to a glitch in one or more steps. Delays can be major or minor. Here’s what each category might look like.
Significant delays could prevent the sale from going through. These situations could slow down the closing process as you negotiate or wait for issues to resolve, or they could even cause the buyer, seller, or lender to withdraw from the transaction.
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A loss of income could make a buyer or lender unable to proceed.
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Appraisal issues could force buyers to make tough decisions if they lack the cash to cover the difference between the sale and appraised prices.
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Significant property damage (think hurricanes and major storms) could make a home unsuitable for sale.
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Inspection issues could reveal problems with the property that neither a seller nor buyer wants to pay to fix.
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Title issues could mean the seller doesn’t hold a clear title, presenting legal challenges with the sale.
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Other changes in a buyer’s finances, including taking out new loans or incurring more debt, could cause your mortgage application to fail the underwriting process.
Learn more: Cash to close — What you’ll owe on closing day
While buyers don’t have much impact on the seller’s side of the transaction, buyers can prevent closing delays by practicing two key skills: proactivity and discipline. Use these tips for each to keep the closing process moving.
Proactivity
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Financial documents. Ask your mortgage lender for a list of documents they need and where to upload them. Upload these as soon as possible. If you’re missing a few, ask your lender for their best tips for getting the required documents.
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Leverage your real estate agent. Having a go-getter real estate agent can be a lifesaver. Top agents have the skills and expertise to help evaluate different homes compared to others in the market. Their thoughts and data can help prevent appraisal issues. If issues arise, they can also help negotiate with the seller, keeping you out of the middle.
Discipline
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Freeze your finances. From the moment you’re preapproved for a mortgage, it’s wise to consider your financial profile locked. This means taking on no new debt and ensuring your bank balances stay roughly the same until you close on your home. It’s frustrating, especially if you want to start buying things for your home. However, if new debt changes your debt-to-income (DTI) ratio, your lender could decide to deny your loan.
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Make the mortgage process your priority. You’ll likely find that multiple people in the home-buying process — the title company, your Realtor, your lender — have several requests simultaneously. Feeling overwhelmed can be normal. However, if you take 30 minutes daily during business hours (this is key) to respond to their requests, you can keep your plate clear and everyone’s process moving.
Read more: Best mortgage lenders for first-time home buyers
It typically takes between 40 and 45 days to close on a house after making an offer. However, every situation is different — some lenders offer faster closing times, certain types of mortgage loans tend to take longer, and there could be delays, such as a low appraisal, that slow down the process.
The fastest you can close on a house is seven to 10 days. This is rare, but there are a few mortgage lenders that offer super-fast closing times.
Whether you can move in on the closing date depends on the terms of your contract. In some cases, you might be able to move in right away. In others, the seller could require a certain amount of time after closing for them to move out and into their new home.
This article was edited by Laura Grace Tarpley.