How Long it Takes to Close on a House

How Long Does Closing On A House Take?

Closing on a house can typically take 30 – 45 days. According to an Origination Insight Report by ICE Mortgage Technology, as of September 2021, the average time to close on a home purchase was 50 days. The average time to close varies based on loan type and the state of the housing market but the variation is relatively small.

Closing in 30 days is ideal, but it’s usually only possible if the buyer’s financial readiness isn’t a barrier and no issues are discovered during the appraisal and inspection of the seller’s home. Standard mortgage loans took an average of 49 days to close in September 2021. According to ICE Mortgage Technology, Federal Housing Administration (FHA) loans took 52 days to close, racking in the longest average closing time.

With careful organization and clear communication between the buyer, seller and lender, you can speed up the closing process, potentially saving you and the seller money and saving everyone unnecessary anxiety.

How Long Does Closing Day Take?

The closing process will take about a month or longer, but your closing day will take about 1 – 2 hours of a home buyer’s time. You typically won’t need more than 2 hours to tie up loose ends and certify your purchase, marking the final steps to buying a house.

Keep in mind that closing can easily go over its allotted time if you aren’t prepared before you go. Show up to closing with valid personal identification, such as a passport or driver’s licence, a copy of your Closing Disclosure and a certified cashier’s check to cover closing costs.

Here are a few tasks you’ll complete on closing day:

Sign Documents

On closing day, you’ll be greeted by a pile of legal documents that need your signature. Many of these documents are legally binding agreements, so you must read through them to ensure they’re error-free and you fully understand all terms.

Closing documents typically include:

• The promissory note: The promissory note outlines the financial terms of your loan and serves as your agreement to repay the entire loan amount.
• The mortgage note: Similar to your promissory note, the mortgage note outlines the terms of your mortgage, such as the down payment and the total loan amount.
• The escrow disclosure: This disclosure provides escrow account details and how much you can expect to pay each month, including taxes and insurance fees.
• The deed of trust:  Also known as a security instrument, the agreement transfers a property’s legal title to a trustee on the lender’s behalf. The trustee holds the title until the mortgage is paid off.

Pay Closing Costs

Closing costs are the fees you owe your lender for originating and processing your mortgage loan. They are due for most home buyers when they close. The total amount you pay in closing fees will vary, but expect to see some of these charges on your Closing Disclosure:

• Application fees for processing your loan
• Closing fees that cover the time a lender’s representative spends 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

Transfer The Home Title

Finally, you’ll end closing with the transfer of the home’s title into your name, making you the official new homeowner. A house title represents all the legal rights around ownership and use of a residential property.

The House Closing Process, Step By Step

Closing on a house happens over several business days and doesn’t include weekends, which may extend your timeline. You can expect to advance through the following stages in the house closing process on this schedule:

Application (1 day)

Completing the loan application typically takes 1 day and can be part of the mortgage pre approval process. Be sure to complete your application as accurately as possible – errors or omissions can cause delays.

Add your name, Social Security number, income, the property’s address, estimated value of the home (provided by your lender) and the amount you want for the mortgage home loan.

Disclosure (under 1 week)

The disclosure stage typically takes a few days and is completed by the mortgage lender. The lender must supply the loan’s terms, including estimated monthly payments, fees and other closing costs.

Documentation (under 1 week)

If you’re organized and can anticipate the information your lender will need, the documentation process may only take a few days. At this stage, the lender will request income and asset documentation. If your assets are complicated – for example, if you’re self-employed with several sources of income – it’s a good idea to communicate that to your lender and have them tell you what paperwork they’ll likely need from you and when you should send it to help expedite the process.

Appraisal (1 – 2 weeks)

Your mortgage lender will order a home appraisal. A licensed expert will examine the home to determine its value. A home appraisal isn’t the same thing as a home inspection. Home inspections are typically optional and happen before getting an appraisal. And the home is inspected to uncover any damage or necessary repairs.

Underwriting (1 – 3 days)

During the underwriting process, underwriters evaluate your financial information to verify you meet all guidelines to qualify for the loan. An underwriter will examine your income, savings, assets, debt and credit history and confirm information about the property.

Conditional Approval (1 – 2 weeks)

Even if your documents are confirmed to be in order after underwriting, you may receive additional requests for documentation. The ask for more paperwork typically occurs during the conditional approval stage. Speak with your lender and have your documents ready to help expedite the process.

Cleared To Close (3 days)

After you receive final clearance to close and the final disclosure of terms, you must wait for a mandatory 3 days before you can sign your final paperwork. During those 3 days, carve out time to review your loan terms and get any expert advice you may need before signing.

Closing And Funding (1 day)

After you sign, there will be one last review of the documents and information by your lender, and then your mortgage will be formally recorded with your county.

Common Reasons For Closing Delays

A closing on a house can be delayed for a variety of reasons. Get familiar with some common causes of delay to anticipate and avoid any issues that may arise.

Low Appraisal Value

One of the most common delays can happen during the appraisal process.

Appraisals help ensure that you pay what your new house is actually worth. If your appraisal comes in lower than the home’s sales price, your lender may need to decrease the amount you can borrow so they’re more likely to recover their investment in case of foreclosure. Other options include the seller considering a lower selling price or your lender requesting a second appraisal. All of these options will likely lengthen your closing timeline.

Issues On The Buyer’s End

Issues on the buyer’s end can also cause closing delays, including:

• Change in employment status like retirement or changing jobs
• Missing payments on current mortgages
• Opening new debts during the loan process
• Buyer fails to deposit the down payment in a savings or checking account with enough time for the money to be verified
• Issues with a buyer’s credit report
• An incomplete loan application
• Delinquent debts or credit usage above the recommended 20%

With planning and support from professionals, such as your lender and real estate agent, you can resolve many of these issues before they delay closing. Buyers must juggle many tasks before they reach the closing table, but you should feel empowered knowing that many of the triggers of many common delays are all within your control to prevent.

Issues On The Seller’s End

Some delays can come from issues on the current homeowner’s end, including:

• Repairs not completed as agreed or issues discovered during the final walk through
• Complications revealed by a title company’s title search
• Liens on the property

Issues On the Lender’s End

Inexperienced loan officers can cause delays. That’s why it’s important to choose your lender carefully. If possible, request a dry closing to schedule the transfer of funds after your paperwork is signed and completed. A dry closing may help you avoid additional delays caused by an inexperienced lender. You’ll need to get the seller’s permission first to use this strategy.

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