How long it takes to close on a house — and how to speed up the process (original) (raw)

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 Guaranteed Rate mortgage review.

Typical steps during the closing process

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.

1. Home inspection

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.

2. Appraisal

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.

3. Title tasks

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).

4. Underwriting

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.

5. Homeowners insurance

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

6. Final walkthrough

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.

Reasons for closing delays

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.

Major delays

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.

How to prevent closing delays

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

Discipline

Read more: Best mortgage lenders for first-time home buyers

How long does it take to close on a house? FAQs

How long does it typically take to close on a house?

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.

What is the fastest you can close on a house?

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.

Can I move in on the day of closing?

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.