So, you’ve found a house, and your offer has been accepted. Congrats! Now you’re probably wondering how soon until you can move in.
That’ll depend on when you’re scheduled to close on your new home. Closing is the date when everyone involved with the sale (including your lender) is satisfied and agrees that you and the seller can sign all the necessary paperwork, and the seller can give you the keys to your new home.
There are a few factors that determine how long it will take to close on a home. Read on to learn what you need to know to get to the closing table in good time.
How Long Does It Take To Close on a House?
A 30-day closing — sometimes even faster — is possible if everything goes smoothly. However, for most home purchases, you can expect to wait around 45 – 60 days before all parties are ready to sign on the bottom line.
What Can Slow Down the Closing Process?
A lot of things can happen during the closing process that could delay or derail your purchase.
Issues that are wholly or partly under your control include:
- Extended renegotiation of the price or disagreement over terms, such as who pays the closing costs
- Delays depositing earnest money or the down payment
- Underwriting not getting enough documentation submitted about your identity, work history, income, credit or other issues relevant to your loan
Issues that can be outside your control can include:
- The seller backing out of the deal
- Repairs not performed as agreed
- Title issues, such as a lien on the property
- An unexpectedly low appraisal
What Can You Do To Speed Up the Closing Date?
There are a few steps you can take that may help speed up the closing process:
- Get conditional mortgage approval: This jump-starts the underwriting process (one of the longest elements in the closing process), and it can give you leverage when you negotiate with the seller.
- Get your financial documents together: Lenders usually need to see your W-2s, bank records, investment statements, tax filings for the last few years and other proof of income and assets.
- Stay in touch: Communicate with your lender regularly and be available to answer the underwriters’ questions as they come up. Keep your phone on you and be ready to take your lender’s calls for more information.
How Does the Loan Type Affect Closing?
The average time to close on a house also varies depending on the kind of loan you’re getting. Different loan types have specific requirements, some of them set by the federal government and others at the state level, that can affect your closing time frame.
Conventional, VA and FHA loans, for example, are some of the most common types of mortgages, and each has its own rules that affect the closing timeline.
Conventional home mortgages
Conventional home loans are the most common type of loan offered through most mortgage lenders and meet the lending requirements set by Fannie Mae or Freddie Mac. These loans usually require a 620 credit score or better and a reliable source of income.
The process usually takes around 30 – 45 days, assuming your documents are in order and there are no snags. In some cases, the process may take up to 60 days, depending on the specific type of loan you’re getting and how well-prepared you are.
VA loans
Loans backed by the Department of Veterans Affairs (VA) are available to honorably discharged military veterans and usually come with a lower interest rate than conventional loans. With a VA mortgage, you might be able to buy a property with a 0% down payment.
Most VA loans close in about 40 – 50 days, which is not far off from conventional mortgages.
FHA loans
Loans backed by the Federal Housing Administration (FHA) are issued by private lenders, but they’re guaranteed by the government. Because of this, lenders are willing to offer them to home buyers whose credit may not otherwise qualify them for a conventional loan.
An FHA loan has more complex underwriting requirements, so these mortgages take a little longer to close. You’ll want to allow up to 60 days because the underwriting alone can take up to 55 days.
Closing on a House: From Making an Offer To Getting Keys
After you make an offer on a home and the seller accepts it, there are several details to take care of. The steps that take place between making an offer and getting the keys typically include:
Setting up an escrow account
Timeline: 1 – 2 weeks after offer acceptance
This is an account you can deposit earnest money into, but not withdraw from. When you put money into an escrow account, your seller can be confident it will eventually be released to them rather than withheld at the last minute. Speak with your real estate agent about the escrow guidelines in your area.
A deposit of 1% – 3% of the sale price that shows the seller you’re negotiating in good faith. It goes to the seller if you back out of the deal.
Doing a title search
Timeline: 1 – 2 weeks after offer acceptance
Title search companies look through official documents to establish that your seller is the legal owner of the property, the documents are all in order and there aren’t any claims to the house, such as a pending divorce or foreclosure action, that can complicate the sale.
Assigning closing costs
Timeline: A few days to a few weeks before closing
Closing costs are all the fees that have to be paid to the various parties involved with the sale. These costs add up fast, and if you agree to pay them, you could be adding several thousand dollars to the final cost of your home.
There isn’t a set rule about whether the buyer or seller pays the closing costs, and you’re free to negotiate until the contract is signed. Usually, the buyer pays many of these costs, but a motivated seller may be willing to make seller concessions to help expedite the sale.
Appraisal of the property
Timeline: 1 – 2 weeks after offer acceptance
Most lenders require an independent appraisal of the home before they will approve your loan. A home appraiser will examine the property and review information on comparable properties in the area and provide both you and the lender with a report on the estimated value of the property.
If the home appraisal is significantly lower than the sale price of the home, the lender may not be able to approve your loan.
Home inspection
Timeline: 1 – 2 weeks after offer acceptance
In addition, it’s a good idea to have your home inspected by a licensed home inspector. They’ll do a top-to-bottom inspection of the property and provide you with a report on any issues including issues with the foundation, structure and roof of the home and electrical, plumbing and sewage issues.
If the inspector notices issues such as a pest infestation or sewage or septic issues, a further inspection by a pest control specialist or plumber may be recommended.
In some cases, a home inspection may even reveal problems with the home that may make you want to walk away from the deal.
Get homeowners insurance
Timeline: 30 days before closing
Most lenders require that you get a homeowners insurance policy for your new home before closing. Allowing yourself enough time to shop for a policy and get all of the terms settled before you close can make everyone’s life easier.
Renegotiation
Timeline: Time varies, depending on how often the home buyer and seller go back and forth
After you get the appraisal and home inspection report, you might find an issue that concerns you. If the appraisal comes in low, you may need to ask the seller to lower the price.
Or, if the home inspection shows that the roof isn’t in the best shape, you may want to renegotiate the price you’ve agreed to pay.
A good sale contract should allow you to adjust the sale price by mutual agreement with the seller and include contingencies that let you walk away with your earnest money if required.
Locking in financing terms
Timeline: At least 15 days before closing
After all this, your lender should have the information it needs to give you final approval. This locks in your interest rate and guarantees that your loan will come through when you close.
Moving from conditional to active approval
Timeline: 1 – 2 weeks after underwriting
When you and the seller signed a contract, you entered an agreement to forfeit your earnest money if you backed out of the sale. However, the contract should include a list of contingencies that allow you to back out, such as the seller not making agreed-upon repairs or if you can’t line up financing.
Active approval is the process of eliminating these contingencies as their terms are fulfilled.
Doing a final walkthrough
Timeline: 3 days before closing
Before you close, you’ll want to do a final walkthrough of the property after the seller has moved out. This lets you check the state of the property and whether agreed-upon repairs were made or items included in the sale are still there.
Loan terms finalized
Timeline: 3 business days before closing
Before you close, your loan officer is required to provide you with the final terms of the loan so that you can review them and make sure there are no surprises before you close.
Closing the deal
Timeline: 0 days before closing
Finally, you can meet up with the closing agent and other involved parties to go over the paperwork and finalize the sale. It takes a few hours for most people but can vary depending on state and local laws.
One recent development is the growth of virtual closings. Thanks to digital document technology and video conferencing, it’s possible for the closing to happen even if all of the parties can’t be in the same room together. That can save everyone time and can make it easier to schedule your closing date.
It’s Closing Day: What To Bring and To Expect
Clear your schedule for closing day, since it usually takes a few hours to go over all the paperwork. Your real estate agent and lawyer(s) may be there, along with the seller and any other parties whose signatures are needed.
You might be able to submit a few of the forms electronically in advance, and in general the more prepared you are, the faster things can go.
What documents do I bring?
You’ll need to bring a valid government-issued ID to establish your identity before signing forms presented by the closing agent. You should also have verified funds, such as a money order or cashier’s check, to pay the closing costs, which are typically due as soon as the documents are signed.
What documents do I sign?
There’s a pretty standard list of closing documents for you to sign. Briefly, these are:
- The promissory note
- The mortgage note
- The Closing Disclosure
- Deed of trust
A Closing Disclosure is a form that lenders give buyers to sign that details the purchase price, lending fees, agreed-to interest rate, estimated property tax, closing costs and other obligations.
What are the closing costs?
Just about every home sale comes with two costs: the sale price and the actual amount you pay, including the unavoidable costs of closing on a house. It can feel like there are a lot of these, and typically they’re all due at closing. Common closing costs include:
- An application fee for loan processing
- Loan origination fees
- Homeowners insurance fees – depending on the contract
- Home inspection fee – if they choose to push this to closing day
- Title insurance
Cash vs. Loans
Wondering how long to close on a house if you pay cash? Closing on your new house can be done a bit more quickly if you’re paying cash instead of financing with a home loan.
Much of the process is the same, such as setting up an escrow account and offering earnest money, but there are a few advantages to paying cash if you’re trying to speed the process along.
- No underwriting required: Underwriting the loan can be one of the most complicated parts of the home buying process because you need to provide your lender with documentation about everything from your employment history to how often you forgot to pay a bill.
- No home appraisal required: The home appraisal is generally required to get final approval from a lender. A delay in scheduling an inspection can affect your financing time frame, and long delays may mean you have to repeat the preapproval process.
Regardless of whether you’re getting a loan or paying cash for your new house, it’s a good idea to get the property inspected and have a full title search performed before you fully commit to the deal. Otherwise, you risk buying a home that may have hidden problems or belong to someone else.
The More Prepared You Are, the Faster You Can Get to Closing
A home is the biggest single purchase most people make, so it isn’t surprising that closing takes as much time as it does. While you probably can’t speed up most of the process, you do have ways to make your part go smoothly.
Take your time, gather your documents and be ready for each step as it happens, and you have the best shot at a fast, problem-free closing.