The process of buying a home is a significant milestone in anyone's life. From the initial search to finding the perfect property, the path to homeownership can be exciting and, at times, a little overwhelming. One crucial aspect of this journey is the closing process, the final step that officially makes you the owner of your new home. In this comprehensive guide, we will explore everything you need to know about the average closing timeline, common reasons that delay closing, and how to ensure a smooth and efficient closing process.

Understanding How Long It Takes to Close on a House

So, how long does it take to close on a house? The timeline for closing on a house can vary depending on several factors. It's essential to be aware of these variables and prepare accordingly. On average, the closing process can typically take 30 – 45 days to close. According to a report by ICE Mortgage Technology, the average time it takes to close on a home purchase was 50 days as of September 2021.This duration can fluctuate based on various factors, including the type of loan and the current state of the housing market.

Ideally, the goal is to close in 30 days. However, this timeframe can only be achieved if the buyer is financially ready and there are no issues during the appraisal and inspection of the seller's home. According to ICE Mortgage Technology, standard mortgage loans took an average of 49 days to close in September 2021. Federal Housing Administration (FHA) loans, on the other hand, took an average of 52 days to close, marking the longest closing times.

With careful organization and transparent communication among the buyer, seller, and lender, you can expedite the closing process. This not only saves time but can also lead to cost savings and reduce unnecessary stress for all parties involved.

How Long Does Closing Day Take?

While the overall process may span several weeks, the actual closing day itself is relatively concise, typically taking one to two hours of a homebuyer's time. During this period, you will finalize the necessary paperwork and complete the steps required to become the official homeowner.

It's crucial to be well-prepared for closing day to ensure that it proceeds smoothly. Arrive at the closing meeting with a valid form of personal identification, such as a passport or driver's license. Make sure to bring a copy of your Closing Disclosure and a certified cashier's check to cover the closing costs.

Here are some tasks you'll complete on closing day:

Signing Documents

On closing day, you'll encounter a substantial amount legal documents that require your signature. Many of these documents are legally binding agreements, so it's essential to carefully review them to ensure accuracy and a full understanding of all terms. These documents typically include:

The promissory note: Outlining the financial terms of your home loan and your commitment to repaying the entire loan amount.
The mortgage note: Similar to the promissory note, it details the terms of your mortgage, such as the down payment and total loan amount.
The escrow disclosure: Providing details about the escrow account, including monthly mortgage payment expectations covering taxes and insurance.
The deed of trust: Transferring the property's legal title to a trustee on behalf of the lender until the mortgage is paid off.

Paying Closing Costs

Closing costs are the fees that you need to pay to your lender for the origination and processing of your mortgage loan. Typically, these fees are settled at the closing. The total amount you owe in closing fees can vary, but you can expect to see some of the following charges listed on your Closing Disclosure:

Application fees for processing your loan.
Closing fees to cover the time spent by a lender's representative at closing.
A loan origination fee for processing your loan application.
A year's worth of homeowners insurance fees.
Home inspection fees.
Title insurance coverage.

Transferring the Home Title

Finally, you will conclude the closing by transferring the home's title into your name. This will officially make you the new homeowner. A house title represents all the legal rights associated with owning and using a residential property. It is important to note that there may be various laws, easements, liens, or rules set by the homeowners association (HOA) that could limit these rights.

The House Closing Timeline, Step by Step

The house closing process occurs over several business days and typically excludes weekends, which may slightly extend your timeline. Let's break down the stages of the house closing process to help you understand how to close as quickly as possible:

1. Application (1 day)

Completing the mortgage application usually takes just one day and may be part of the mortgage preapproval process. Ensure that you fill out your application accurately, as errors or omissions can lead to delays. Include details such as your name, Social Security number, income, pay stubs, the property's address, estimated home value (provided by your lender), and the desired loan amount and loan type.

2. Disclosure (under 1 week)

The mortgage lender takes care of the disclosure stage, which typically lasts a few days. During this stage, the lender provides you with all the necessary information about the loan, such as the terms, estimated monthly payments, fees, and other closing costs.

3. Documentation (under 1 week)

Efficiently managing your documentation is essential, and it may only take a few days if you are organized and anticipate the information your lender requires. During this stage, the lender will request income and asset documentation. If your financial situation is complex, such as being self-employed with multiple income sources, communicate this to your lender to determine the necessary paperwork and deadlines.

4. Appraisal (1 – 2 weeks)

Your mortgage lender will order a home appraisal conducted by a licensed expert to assess the property's value. It's important to note that a home appraisal is distinct from a home inspection, which typically occurs before the appraisal and aims to identify any damage or necessary repairs.

5. Underwriting (1 – 3 days)

Underwriters evaluate your financial information during the underwriting process to verify that you meet all the loan's guidelines. They examine your income, savings, assets, debts, and credit history, along with confirming property-related details.

6. Conditional Approval (1 – 2 weeks)

Even after underwriting, you may receive requests for additional documentation during the conditional approval stage. Being proactive and prepared with the necessary documents can help expedite this process.

7. Cleared To Close (3 days)

Once you have received final clearance to close and the final disclosure of terms, there is a mandatory three-day waiting period before you can sign your final paperwork. It is important to use this time wisely by reviewing your loan terms and seeking any expert advice you may need before signing.

8. Closing and Funding (1 day)

After you sign the final documents, your lender will conduct one last review before formally recording your mortgage with the county.

Common Reasons for House Closing Process Delays

While a smooth closing process is ideal, certain issues can lead to delays. It's important to be aware of these common causes to anticipate and address them effectively.

Low Appraisal Value

One of the most common delays occurs during the appraisal process. Appraisals help ensure that you are paying a fair price for your new home. If the appraisal comes in lower than the agreed-upon sales price, your lender may need to adjust the loan amount accordingly to mitigate potential losses in case of foreclosure. This situation may lead to negotiations between the buyer and seller or even a request for a second appraisal, all of which can extend the closing timeline.

Issues on the Buyer's End

Issues on the buyer's side can also cause it to take longer to close on the house, including:

Changes in employment status, such as retirement or job changes.
Home buying process issues like a home inspection failing.
Missing payments on current mortgages.
Opening new debts during the mortgage process.
Failure to deposit the down payment in an account with sufficient time for verification.
Problems with the buyer's credit report.
An incomplete loan application.
Delinquent debts or credit usage exceeding the recommended 20%.

With proper planning and support from professionals like your lender and real estate agent, many of these issues can be resolved before they lead to closing delays. Buyers have numerous tasks to juggle before reaching the closing table, but knowing that many common delay triggers are within your control can empower you to take proactive measures.

Issues on the Seller's End

Delays can also result from issues on the current homeowner's side, such as:
Repairs not completed as agreed or issues discovered during the final walk-through.
Complications revealed by a title company's title search.
Existing liens on the property.

Issues on the Lender's End

Inexperienced loan officers can cause delays, so it's important to choose your lender wisely. If you can, try a dry closing by scheduling the transfer of funds only after all the paperwork is signed and completed. Just make sure to get the seller's permission if you decide to use this strategy.

Conclusion - Preparing For Closing Day Pays Off

While the home closing process typically spans 30 to 45 days, being prepared to close as fast as possible will speed up the closing process. Although some delays may be unavoidable, you can take steps to ensure a smooth closing experience. This includes paying down your debts, promptly responding to your lender's requests, preparing all required signing documents, and ensuring the on-time deposit of the down payment.

Starting early in the process can help you stay on track with your home buying timeline and increase the chances of a seamless closing. So, whether you're a first-time homebuyer or a seasoned real estate veteran, being informed and prepared for the closing process is the key to a successful transition to homeownership. Get started by applying and getting prequalified online today to stay on track for your closing.

Mortgage Closing: How Long Does It Take to Close on a House?