If you’ve found your dream home and are ready to close on the property, the closing process can feel like an eternity. The excitement of moving into a new home, combined with the burden of packing and preparing to move, following up on contingencies and other closing obligations, can be a lot. The average closing time for a home takes 30 to 45 days.
That can vary, and your closing could take more or less time, depending on various factors. Read on to determine how long it takes to close on a house for your situation.
How Long Does it Take to Complete the Closing Transaction for a House?
The average closing time of a house is 30 to 45 days from the moment you submit an offer. The closing time could be impacted by the housing market, your financial situation or the season and how busy lenders are.
Closing on a house also requires many steps, each of which could potentially delay closing. For example, from the initial offer to the signed purchase contract, the time could be a day or weeks of negotiation. You’ll need a home inspection, financing, a title search and a final walkthrough before closing.
What Steps Are Involved in the Closing Process?
Here’s a step-by-step breakdown of the steps involved in the closing process, with average timeframes you can expect for each stage.
Before even making an offer, potential homebuyers who aren’t paying in cash should get a mortgage preapproval. This will allow you to know how much you can afford and the interest rates you can expect. You can also compare lenders before locking in a mortgage rate.
2. Offer and Acceptance
The first step in closing is the offer. The buyer makes an offer to purchase the house, including terms and conditions, and the seller either accepts the offer or comes back with a counteroffer. Once the offer is accepted, you’re ready to start the closing process. This negotiation could take one day to one week or more.
3. Purchase Agreement
Both parties sign a purchase agreement detailing the terms of the sale, including contingencies, closing date and responsibilities. At this stage, the buyer must make a good-faith deposit into an escrow account to secure the contract. It’s also time to start the process of securing financing and performing inspections.
After the purchase contract is accepted, the buyer must apply for a mortgage loan by submitting a mortgage application. The lender will review all financial information to determine loan eligibility and terms, including closing costs.
During this process, the lender may ask for additional documentation regarding income, expenses, assets and liabilities and start the underwriting process and appraisal. These stages of financing, including appraisal, usually take two to four weeks until you receive conditional approval.
5. Home Inspection
After signing the purchase agreement, the buyer is responsible for hiring a professional home inspector to evaluate the property for structural, mechanical or safety issues. A home inspection typically takes around four hours, but this varies by property size and condition.
This will turn up any issues that may have been outlined in the contingencies. In case of major issues, the buyer and seller may need to renegotiate the purchase contract, or the seller may offer to pay for certain repairs.
As part of the mortgage approval process, the lender will order an independent appraisal of the property to assess its market value and ensure it meets the loan amount. A licensed expert performs the appraisal. The lender may also request the inspection results or perform another inspection. This stage usually takes one to two weeks.
7. Title Search
While the inspection and appraisal process is in motion, a title company will also search to verify that the seller has legal ownership of the property and there are no liens or outstanding claims against it. The title search process starts once you apply for mortgage approval and typically takes one to two weeks.
8. Closing Disclosure and Conditional Approval
While the closing disclosure might happen before the appraisal, in most cases, this will happen after the borrower submits all documentation and the appraisal is performed. The lender provides a closing disclosure to the buyer, outlining the final loan terms, closing costs and details about the loan.
9. Final Walkthrough
After appraisals and inspections are finished, all contingencies are complete and financing is secured, the homebuyer will receive a final clearance to close from the lender. You must wait a mandatory three days to sign your final paperwork.
During that time, you can inspect the property one last time before closing to ensure repairs or agreed-upon changes have been made. This usually takes an hour or less.
10. Closing and Settlement
Finally, all parties gather to sign the required documents, including the mortgage, deed and closing statement. The buyer provides the remaining funds for the purchase, including the down payment and closing costs.
11. Recording and Title Transfer
As part of the closing process, the title transfer is completed. The deed and mortgage documents are recorded with the local government to transfer ownership from the seller to the buyer officially. This can be done on the same day as closing.
After the closing procedure is complete, the seller delivers the keys to the buyer, and the new homeowner officially takes possession of the house. This happens as part of the closing day.
What Factors Commonly Contribute to Closing Delays?
Factors contributing to closing delays usually relate to delays in mortgage approval but can also relate to issues with the buyer or seller. Here’s an overview of why you might experience delays.
1. Low Appraisal Value
A low appraisal value compared to the contract prices can lead to closing delays. Lenders base the loan on the appraisal, and a low appraisal can delay or even derail closing. Your real estate agent may be able to help you manage the appraisal and keep the sale on track, although you might be approved for a lower loan amount.
2. Lender’s Issues
Incorrect information or missing documents can delay the closing process. To avoid these types of delays, stay in close communication with the lender until the closing day and quickly provide any missing documents or correct mistakes in the information given to avoid delays.
Other lender issues center on busy lenders. More buyers purchase properties in the spring and summer months, so closing can take longer during this time.
3. Seller’s Issues
If the appraisal value falls short, the mortgage lender might not approve the loan, which can lead to closing delays. The seller can speed up closing by reducing the price of completing required repairs to increase the property’s value.
If the seller agrees to perform certain repairs before the closing, failure to complete these or delays in completion can also delay closing. A home in a high-risk area that doesn’t qualify for insurance can also delay closing.
4. Buyer’s Issues
Common issues on the buyer’s end that can lead to closing delays are if the property fails to meet contingencies or the buyer fails to secure financing. In the first instance, the buyer has the option to renegotiate the purchase price or request the seller to perform necessary repairs.
If the buyer fails to secure financing, they can apply for another mortgage or renegotiate terms with the lender they were working with.
The final buyer’s issue that can lead to delays in closing is if the buyer has second thoughts or wants to back out of the transaction. Whether the buyer will recover the good-faith deposit in escrow in this case is outlined in the purchase contract.
What to Do to Speed Up the Closing Process?
To help expedite the closing process, it is crucial to provide all necessary paperwork, promptly respond to any requests for additional information or documentation and work closely with your real estate agent to resolve any issues that may arise.
You’ll want to schedule all inspections and title searches quickly so that waiting for these necessary steps doesn’t delay the closing. Finally, if you can buy in cash, this can substantially speed up closing times and help you negotiate a better purchase price.
What Happens on the Actual Closing Day?
On the closing day, you will typically meet with all parties involved, including the seller, real estate agents, closing attorney or title company representative. A lender representative or loan officer may also be present.
During the closing, you will review and sign all necessary documents, pay closing costs and fees and officially transfer ownership of the property. In addition, closing day includes transferring funds from escrow to the seller’s account and updating the house deed to your name.
Closing on Your New Home
While the process of closing on a home may seem tedious, the total time is usually less than two months. To speed up closing time, be alert to provide all requested documentation promptly and schedule all necessary inspections well before the closing date. Cash buyers can secure a faster closing because they don’t depend on a mortgage lender.
To prepare to buy a home, learn more about closing costs, plan to save more money for a house and learn about various home inspections you might need.
Frequently Asked Questions
Yes, you could schedule your move before closing, as long as you leave enough time for closing so you’re not in a position where the movers have arrived and you haven’t yet closed on the new property.
To ensure a smooth closing process, prepare all necessary documentation ahead of time and respond promptly to any requests for additional information from mortgage lenders.
The closing date is usually at least one month after the purchase offer is accepted. You could set a provisional closing date that could be modified if either party isn’t ready to close by that date because of contingencies, inspections, appraisal or loan approval.