Once you’ve found a home to buy, it’s natural to want to close the deal quickly. As of mid-2022, the average closing time was 48 days after acceptance of an offer, down slightly from 51 the year before.
All-online mortgage options make lending faster, and borrowers are enthusiastic about an online mortgage process, ICE Mortgage Technology has found. Most home sales can be buttoned up in 20 to 30 days. Still, delays can happen.
Here’s what you need to know in order to belly up to the remote or real closing table.
How Long Does Closing on a House Take?
If you’re paying cash for a house, you’ll typically be able to close quickly.
But let’s assume a mortgage will be part of the process. You’ve jumped through the initial hoops of the mortgage loan process, including making an offer on a home you like.
If accepted, you’ll provide an earnest money deposit and sign a purchase contract. The price and any contingencies — conditions that must be met for the deal to proceed — are included in the purchase agreement.
This begins the due diligence period. It includes a title search to verify ownership and look for any liens that need to be paid off to ensure clear title to the new home. Most but not all issues will be reflected in a preliminary title report.
A typical contingency period is 30 to 60 days, though something like the inspection could be required within 10 days or less. Buyers can ask for extensions in writing.
Here are four common contingencies:
The mortgage contingency nullifies the deal if you can’t procure a mortgage within a certain time. The contingency language may be specific about the type of loan, down payment, and interest rate.
Getting pre-approved for a mortgage is standard, but it’s not a guarantee. After your chosen home is under contract, your mortgage still has to go through underwriting.
Recommended: How Does the Mortgage Pre-Approval Process Work?
Home Sale Contingency
You need to sell your current house to complete the purchase. You’ll typically be given 30 to 60 days to do so. In a competitive market, many sellers won’t even consider the offer with a home sale contingency.
But some sellers may employ a kick-out clause, which allows them to keep showing their home and “kick out” the contingent buyers if the sellers receive an offer without a home sale contingency.
An appraisal is usually required when a home is being financed. If the property valuation is less than your offer, you may walk away from the deal. You could also cough up the difference or ask the sellers to lower the price.
How long after the appraisal to close? About two weeks.
By the way, you can put an offer on a house that’s contingent.
Home Inspection Contingency
A home inspection is generally not mandatory for any loan type but will help ensure that the home is free of issues that may result in expensive repairs. In a seller’s market, many properties are sold as is, meaning sellers won’t negotiate for repairs after the inspection.
In a buyer’s market, sellers might agree to pay for some repairs and also slightly reduce the home’s price.
First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.
How a Mortgage Closing Works
You’ve qualified for a mortgage and chosen a lender.
After you’ve supplied income, asset, and other documentation, all of the contingencies have been satisfied, and your mortgage has received final approval from underwriting, it’s time to prepare for closing.
This will be the big day, when signing the closing documents legally transfers ownership from the sellers.
Three days before your closing date, your lender will provide you with a closing disclosure that outlines the final closing costs and terms of your home loan. You can compare this five-page form with the loan estimate you received after applying for the mortgage.
Paperwork (lots of it) will have been prepared for you, including the deed of trust or mortgage and the settlement statement.
In some cases, everyone gathers in one place to sign closing paperwork. Other times, buyers sign separately from sellers. And more and more states are allowing remote online notarization or a hybrid.
Pay Closing Costs
The lender will usually tell you the amount needed for closing several days before the event. A wire transfer may be arranged a day or two before closing. Or you can present a cashier’s check or certified check that day.
Cash to close includes closing costs (unless you opted for a no closing cost mortgage) and your down payment minus your earnest money deposit and any seller credits.
Transfer the Home Title
After signing a mountain of documents, the closing attorney, escrow officer, or title company representative will record the house deed, and you will be given the house keys.
Recommended: First-Time Home Buying Guide
The House Closing Process, Step By Step
Here are the basics.
1. Seller signs the purchase agreement.
2. Buyer may order a home inspection.
3. Buyer applies for the mortgage (and considers asking to lock in the rate).
4. Lender orders a home appraisal and conducts credit underwriting.
5. Mortgage is approved.
6. Buyer provides proof of homeowners and title insurance.
7. Buyer receives the closing disclosure; notice of closing time, date and location; and what to present at closing, like a photo ID and cashier’s check or proof of wire transfer for cash to close.
8. Buyer takes a final walk-through, verifying that sellers have made any required repairs and that nothing in the purchase agreement was removed. The buyer can check for leaks, turn on heating and air conditioning, and so forth.
What Causes Delays When Closing on a House?
A buyer and seller agree to a target closing date in the purchase contract, but the closing doesn’t always happen on or before that date.
Financing, appraisal, inspection, and other issues can delay a closing. Here’s a taste of what may cause a postponement:
Lender wants more documentation. Even if buyers were pre-approved, received their mortgage commitment, and were cleared to close, lenders will review credit and bank statements one last time within a few days of closing. Any abnormalities can delay the closing.
The mortgage is denied. Even after pre-approval, a home loan may be denied for lots of reasons, sending buyers back to the starting block.
Interest rates surge unexpectedly. This can affect qualification if the loan is not locked.
The appraisal comes in low. A home may appraise for less than the purchase offer. Buyers can request a second appraisal, ask the sellers to renegotiate the price, put more down, pay the difference, or walk away if they have an appraisal contingency.
The inspection reveals that major repairs are needed. If it’s an as-is sale, buyers can walk away if they had an inspection contingency in the contract. They could still try asking the sellers to make certain repairs, request a decrease in the sale price based on the cost of repairs, or ask for a home warranty.
The title is not clear. A contractor’s lien, for example, can cause a closing delay if the contractor can’t be found to settle it.
Buyers can’t sell their house in time. If sellers agreed to a home sale contingency, the clock is ticking. If the buyers’ home doesn’t sell in time, the deal could fall through.
Instrument survey issues. Boundary line encroachments or disputes can hang up a closing.
Unrealistic closing date. Any complication can cause a deadline to fail. An extension must be approved by each party.
The Takeaway: Closing Day Preparation Pays Off
How long does it take to close on a house? The average closing takes place 48 days from the time an offer is accepted, but the timeline varies. Getting to the closing table, in person or remotely, is an accomplishment. It means you qualified and persevered.
If you’re shopping for a mortgage, it pays to get pre-qualified and pre-approved.
SoFi offers low fixed rate mortgages and low down payments. If you’re in the market for a primary home, investment property, conforming loan, jumbo loan, refinance, or home equity loan, see what SoFi can do for you.
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