Once you’ve found your house of choice, it’s natural to want to close the deal as quickly as possible. After all, you may already be planning how to position your furniture, decorate, and otherwise turn the house into a home. Your home.
On average, this takes 41 days from signing a purchase contract. Not all processes are alike, though, and this post will walk you through what a typical home purchase is like—from shopping for a new home to when you close, including what types of delays can take place, what documentation is needed to close, what to expect on closing day, and more.
How quickly a house can close might also depend on where the buyer finances his or her mortgage loan.
Home Buying Process
The kind of offer you make might affect how soon you can close on your home. For example, if you’re considering making a cash offer, you’ll typically close more quickly , as many of the potential roadblocks have been removed.
But let’s assume a mortgage loan will be part of the process. In that case, you might want to know how much house you can afford to reduce the chances that you’ll run into snags in the mortgage approval process.
If you’ve decided upon a particular lender, you could talk to them about getting preapproved for a mortgage loan before making an offer on a home.
Being preapproved for a mortgage is more in-depth that being prequalified, with the lender providing a preapproval letter that’s valid for a period of time, often for 90 days. Having this letter might boost your chances of having your offer accepted, because the seller will know you have secured financing.
As part of an offer to a seller, the price and any contingencies must be included in the purchase agreement. These are conditions that must be met for the deal to proceed. Typical contingency (tire-kicking) periods run anywhere from 10 to 21 days. If competition for the home is fierce, you might decide to not include any contingencies, which could help speed up the home closing process, but can also place your earnest money deposit in jeopardy.
One example of a commonly used contingency is if you request a home inspection to help ensure that there aren’t issues in the home that may ultimately result in expensive repairs or render the home ineligible for lender financing because for instance, health or safety issues are identified. If this contingency is included in your contract, then you could ask your real estate agent for inspector recommendations, or you could search for an inspector affiliated with the American Society of Home Inspectors .
How quickly you can find an inspector and how quickly the inspection can be done might play a role in the timeline of your home’s closing. The home inspection itself is often general in nature and will typically include a review of the home’s plumbing, electrical wiring, heating and cooling, and ventilation.
The structural integrity of the home is usually also inspected and might include the foundation, support structures, walls, attic, and roof. If the home inspector identifies potential issues, such as in the foundation, a structural engineering report done by an expert in that field might be recommended.
After the home is inspected, you’ll likely be sent a report with the findings. And, yes, how quickly you receive this might affect the closing timeline—keep a close eye on any outstanding contingency dates and request an extension when needed. Depending on the report findings, its contents may trigger a second round of negotiations between buyer and seller, and the result may be that the seller agrees to make any repairs.
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Or, a new selling price could be negotiated, with the home then sold in “as is” condition, as long as the lender considers any outstanding repairs to be cosmetic in nature. The seller may agree to a combination of these , paying for some repairs and then also slightly reducing the home’s price. Or you might decide that the damage is so significant that purchasing this home no longer makes financial sense.
The home will likely need to be appraised. If the value comes back lower than expected, this could also trigger a round of negotiations..
Also, it isn’t unusual for a buyer to want to use funds from the sale of his or her current home as the downpayment on the new one. If the sale of the buyer’s old home goes more slowly than expected, an extension will need to be requested and that could also affect the closing process on the new home.
A title search will be conducted to verify what liens need to be paid off to ensure the buyer will have a clear title to the new home. Sometimes, there are more liens than anticipated (tax liens , perhaps), or mechanics liens.
These are some of the reasons the question of “How long does closing on a house take?” can’t definitively be answered. Now we’ll move on to the next stage of the home buying process—what to expect and delays to try to avoid.
The Final Walkthrough
Approximately 24 hours before closing, you’ll take a final walk-through of the home . Any belongings still in the home should be those that you and the seller mutually agreed should stay. This might include, for example, draperies or kitchen appliances.
This is also your final opportunity to double-check that any items the seller was supposed to remedy—whether stuck doors or problematic toilets—have been fixed.
You can test appliances, light fixtures, and garage door openers. You can check for leaks, turn on both heating and air conditioning, make sure any trash has been removed, and so forth.
If the walkthrough can be scheduled quickly, then that might save time. If there are delays, this might extend the timeline to closing. Once that’s completed, then the next step is scheduling the actual closing, the speed of which can affect the timeline from purchase agreement signing to closing.
The Closing Process
Three days before your closing date, your lender will provide you with a Closing Disclosure (CD). This CD outlines the final closing costs and loan terms of your home loan. You can compare this five-page form with the Loan Estimate (LE) you received after application and ask questions about anything that may have changed before loan signing.
The rest of the buying process is usually pretty straightforward, as long as you have proper documentation . This includes a photo ID and proof of homeowners insurance. You’ll also have to have all of the funds needed for a down payment, closing costs, and so forth owed to the various entities involved.
Paperwork will have been prepared for you by the lender, such as the mortgage note , mortgage deed, Closing Disclosure and more. You’ll also have documentation from the escrow company/settlement agent to sign, such as a Final Closing or Settlement Statement, which will include closing costs from all parties in the transaction.
The settlement agent will coordinate the actual transfer of ownership through the deed and pay the seller monies owed. The title company will provide documentation of clear ownership and title as required by the lender.
In some cases, everyone gathers together in one place to sign closing paperwork. Other times, buyers sign separately from sellers. The latter arrangement might be faster, because it requires less coordination of schedules.
Once all this documentation has been signed and the proper documentation is recorded with the county recorder’s office, you’re officially the new owner!
Choosing the Right Lender
The question of “How long does closing take on a house?” might be answered, in part, by how long it takes the lender to approve the loan, process the loan, and participate in the closing. So it’s reasonable to want to choose a lender that expedites the process so you can get into your new home as soon as possible.
When evaluating your lending options, it makes sense to check if the lender offers competitive interest rates, along with the terms you need. For example, if you’re interested in a variable-rate loan, are those available? How much is required for your down payment? Will the lender require you to pay private mortgage insurance if you put down less than 20%?
How much of the process can take place online? How much needs to be done on paper or in person? What fees are you responsible for, including origination fees, lender fees, and so forth? What benefits does a particular lender offer that appeal to you?
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