Buying a home can be equal parts adventure and anxiety, hustle and hurry-up-and-wait. After all, you’ll be eager to get into your new home — but home buying is a legal transaction that doesn’t happen quickly. Instead, real estate closings involve several complex elements that take time to navigate.
Once you’ve made the decision to buy a house, a lengthy process begins. For starters, buyers who need financing must go through the mortgage process, including underwriting and a home appraisal. Home buyers also use this “due diligence period” to get a home inspection, have the property surveyed, review the homeowners association (HOA) covenants and restrictions, and research the title.
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So, just how long does it take to close on a house? If you’re buying with a mortgage, it takes an average of 54 days to close a purchase loan, according to loan platform provider ICE Mortgage Technology.
Of course, numerous factors can hasten or hinder the closing process. For example, buying with cash usually speeds up the process, but forgetting to buy homeowners insurance can slow it down. Still, while you can’t control the timing of every aspect of the closing process, there are things you can do to reduce the risk of delays.
The house closing process
The closing process officially starts when you and the seller sign a purchase contract. From there, you (and your lender) have a long list of tasks to check off before you can sit at the closing table. Here’s what you can expect during the housing closing process.
Escrow account (1-2 days)
The buyer’s or seller’s real estate agent usually opens an escrow account early in the closing process. The account holds your earnest money deposit and other important items throughout the closing (or “escrow”) process. A neutral third-party escrow agent (sometimes called a title agent) holds the assets and eventually transfers them to the appropriate parties when all the conditions in the agreement are met, generally at closing.
Documentation (2-14 days)
Your lender will request specific paperwork from you so it can substantiate your income and understand your debts. The more prepared you are to hand over the documents, the faster this step will progress. In addition to your photo ID and Social Security card, your lender will ask for documents such as:
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Tax returns
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Recent pay stubs, W-2s, 1099s, or other proof of income
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Bank, brokerage, and retirement account statements
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Down payment gift letters
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Rental history, including contact information for previous landlords
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Rental property details (if you own another property)
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A detailed list of all your debts
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Child support or alimony paperwork
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Monthly job-related expenses
Home inspection (5-15 days) & home appraisal (7-14 days)
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Home inspections and home appraisals are both essential steps in the closing process, but they serve separate functions. While a home inspection determines the property’s condition, an appraisal tells you (and your lender) how much the house is worth. Both are carried out by third-party professionals who visit the home and provide written reports with their findings.
Home inspections are usually optional, but they’re a good idea since they can uncover potential problems and hazards. If you finance a home purchase with a mortgage, your lender will likely require an appraisal to ensure you’re paying a fair price for the house. The appraisal is usually done after the home inspection. That way, if the inspection uncovers any deal-breakers, you can skip the appraisal (and save time and money).
Title search (7-14 days)
A property title search examines public records to confirm the seller is the property’s legal owner — and has the right to transfer ownership to you. It also reveals if there are any claims, liens, easements, or restrictive covenants that could affect your purchase.
A real estate attorney or title company usually conducts the title search, which could uncover title defects such as unpaid property taxes, boundary/survey disputes, or pending lawsuits. You can opt to buy an owner’s title insurance policy to protect against errors, omissions, or defects in the property’s title.
Mortgage underwriting (30-60 days)
Mortgage underwriting is typically the most time-consuming step in the closing process, so it pays to start the mortgage process as soon as possible — and be sure to respond quickly to any lender requests. The underwriter verifies information about the property (via an appraisal) and evaluates your finances by examining your income, savings, assets, debts, and credit history.
Once the underwriter has reviewed your application, they will either grant conditional approval, suspend your file (pending additional information), or deny your application if you don’t meet the guidelines. Depending on the lender, it can take one to two months to issue a final “clear to close,” signaling that your loan has been approved.
Closing disclosure (3 days)
Once you are cleared to close, your lender must provide a Closing Disclosure at least three business days before your scheduled closing date. This document specifies essential details about your loan, including the:
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Loan term, amount, and interest rate
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Estimated monthly mortgage payment
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Closing costs
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Cash to close (the amount of money you need to bring to closing)
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Loan disclosures
There’s a mandatory three-day waiting period between the time you receive the Closing Disclosure and when you can close on the loan. During this time, you should review the document to ensure you’re getting the mortgage terms you expected. If anything looks amiss, speak with your real estate agent and lender right away.
Final walkthrough (1 day)
You and your real estate agent will do a final walkthrough of the property the day before your scheduled closing. You’ll make sure the previous owners have moved out and made any repairs they agreed to. You’ll also confirm the home is in the same (or better) condition than when you agreed to buy it.
Closing day expectations
Closing day is the final step in the home buying process, and it usually takes about one to two hours. You’ll sign various legal documents, including the promissory note, mortgage note, escrow disclosure, and deed of trust.
You’ll need to bring several items with you, including a form of identification, proof of homeowners insurance, and your Closing Disclosure to compare to the final paperwork. You’ll also need a certified or cashier’s check or evidence of a wire transfer to cover your down payment and other closing costs. Finally, the home’s title is transferred into your name, making you the new homeowner.
Common closing day delays
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The average closing time is 54 days, but it can take more or less time, depending on various factors. Your closing day could get pushed back several days (or even several weeks) if you experience any setbacks like:
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Buyer financing issues
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Title issues
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A low appraisal
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Inspection problems
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Slow repairs
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Final walkthrough surprises
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Lack of homeowners insurance
Some of these delays are out of your control (for example, the home could appraise for less than the agreed-upon purchase price). Still, you can help keep your closing timeline on track if you:
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Get pre-approved for your mortgage (and stick to your budget)
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Avoid life changes that could affect your finances (for example, taking on more debt)
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Respond quickly to lender requests
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Schedule the home inspection as early as possible
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Show up at closing with your ID, proof of homeowners insurance, and cash to close in hand
Wrapping up
Every real estate transaction is different, so it’s difficult to predict exactly how long your closing will take. The average is 54 days, but the process could take more or less time depending on factors like your loan type, how busy inspectors and appraisers are in your area, and what the title search uncovers.
Ultimately, the slowest step in the home buying process is usually the mortgage. So, if you’re a cash buyer who can skip the lengthy mortgage and appraisal process, you could close in as few as two weeks.
Source: https://t-tees.com
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