How Long Does It Take to Close on a Home?

How Long Does It Take to Close on a Home?

From filling out your initial mortgage loan application to closing day, closing on a home can take anywhere between 30 and 45 days. Still, this is only the average closing time on a home.

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So, how long does it take to close on a home for you? To help you more realistically pinpoint the time it takes to close on a home, we’ve created this blog. We’ll cover the various house closing factors that will either slow down or speed up your home closing process. Let’s jump right in.

1. Understanding of the Home Closing Process

Before anything, it’s important to understand the basics of the home closing process. Develop an understanding of the home closing roadmap so that you don’t mistakenly miss any step along the way. Missing a step or two will force you to take a complete halt, adding weeks or even months of additional time to closing that dream home.

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Investopedia's 12 Steps of a Real Estate Closing is a great resource to help you understand the general home closing roadmap and timeline.

2. Payment Option

Are you paying for the home with bundles of greens or are you applying with a lender instead?

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Cash-only transactions typically close a home faster than loans and mortgages for two reasons:

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1) There are background checks, forms, and other requirements necessary before a housing loan is given to anyone.

2) Sellers are more inclined to close faster on cash-only transactions because there’s less risk and work involved.

3. Escrow

Escrow is a legal arrangement in which a neutral third-party agency holds money and assets until the buyer and seller have met certain conditions. This step guarantees a secure transaction, and you’ll need to open an escrow account to close on most homes. The escrow process coincides with your house closing, making the average escrow process take between 30 and 45 days. You may approve early closing of escrow, but this typically comes with a fee.

4. Mortgage Type

There are many mortgage types out there. But, did you know each one has a different effect on how long it takes to close? Each mortgage type processes differently, with the range being between 4 to 8 weeks:

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• Conventional loans. Mortgages not secured by the government take about 4 weeks to process.
• FHA loans. Mortgages insured by the Federal Housing Association take about 6 weeks.
• VA loans. Mortgages issued by lenders and guaranteed by the U.S. Department of Veteran Affairs may take 6 weeks or longer.

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Contact us at LendPro Mortgage and let us make sure you’re getting the right mortgage type.

5. The Appraisal

Before any loan is approved by your lender, an appraisal needs to be done on the home. This is done to make sure the home is worth what you're really paying or that you are applying for a reasonable loan amount. If the appraisal comes back too low, then you’ll likely have to pay the difference in cash.

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You can attempt to negotiate the price with the seller or order another appraisal on the home. Either way, this will take extra time.

6. Insurance

If the seller (or any previous owners) made a major insurance claim on the home, insurance companies may deem the home too risky to insure. This is a problem because lenders will typically require that you are maintaining homeowner’s insurance to receive any type of loan.

7. Title Search

Whether it’s the state, IRS, or even a seller’s relative – it’s important that nobody has a legal claim to the property. The title search itself takes 3 – 5 days to be completed. Once that’s done, you’ll need title insurance which protects you from any future claims on the home. However, if there is an unresolved claim on the home, you’ll need to work to resolve this issue before closing.

How You Can Minimize Home Closing Times

Need to close your dream house as soon as possible? Luckily, it is possible to shorten the home closing timeline. If you follow our tips, that is:

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• Locate and organize all necessary documents (e.g. proof of income, identification, etc.) before the home search.
• Complete a background check on homes.
• Get yourself pre-approved. This step is valuable since you’ll know exactly how much you can afford on a house and you won’t need to be approved again later on.
• Remind and nudge your lender to order any appraisals on time.
• When in doubt, ask questions until you know the answer to every detail.
• Be organized and communicate well.

Check out this awesome home closing checklist.