So you found your dream home, crunched the numbers to make sure you can afford it, and sent in an offer that the seller accepted. You’re about to be a homeowner, and it feels good! But…now what? Well, now you await the much-anticipated closing day. As you start packing and preparing to move, check out the following details and we’ll answer how long does it take to close on a house and what to expect when you do.
First things first: how long does it take to close on a house? As you might imagine, the exact answer varies depending on the circumstances. But on average, it takes about 30 to 45 days after you submit a mortgage application for the closing date to arrive. This range assumes that you’re using a conventional home loan. If you’re paying cash, it will take less time to close. And if have a different loan or just a complicated home buying situation, it could take longer.
Now you know the general answer to the common question of “how long does it take to close on a house?” If you’re also curious about how long closing day will last, the answer is about two to three hours. On closing day, you’ll basically be reviewing and signing a stack of papers, including the deed of trust/mortgage, promissory note, loan estimate, closing disclosure, HOA documents, transfer tax declarations, and more.
You’ll also typically pay closing costs on closing day, so bring a cashier’s check for the total. If that sounds outdated to you and you prefer electronic payment options, you can use LemonBrew Pay to easily transfer money digitally during the home buying process! If you have any questions about the amount you’ll be paying at closing or the paperwork you’ll need to review, ask your real estate agent for guidance so you feel prepared when this important day arrives.
Now you know approximately how long you’ll have to wait for closing day. But what’s happening during this time? The first thing to know is that once you and the seller have signed a contract agreeing on the total price of the home and the closing date, you’re in escrow. This process begins by opening an escrow account, which should take a few days. You’ll deposit your earnest money into this account.
After that, it’s time to get an appraisal. Your lender will oversee the appraisal in order to make sure the house is worth what you’re planning to pay. If the appraisal ends up lower than the asking price, you’ll either need to offer less money for the house—and hope the seller accepts it—or pay the difference out of pocket. Granted, you could request a second appraisal or try getting one from another lender to see if the result is better. If not, you can cancel the contract.
Once the appraisal is done, which should take about two weeks, you need to secure financing for the house. At this point, you’ll find out what your home loan total, interest rate, and closing costs will be. The next step is to approve any disclosures from the seller, which will ensure you know about any potential problems in the home before closing day.
Next, you should request an inspection of the house you plan to buy. When you receive the inspector’s report, you’ll ask the seller to make repairs if necessary. This part of the escrow process should be complete within about two weeks. Then you should buy title insurance and homeowner’s insurance, making sure to get premium estimates from a few different insurance agencies so you get good coverage for the best price.
One of the last steps of escrow is the final walk-through. This means you’re getting very close to closing on your new home! You’ll simply walk through the house to make sure there’s no new damage and that the seller has made the repairs you requested. The walk-through should only take an hour or two.
If you’re satisfied with the condition of the home, you’ll just need to review a form that goes over the final loan terms and all closing costs. You can compare it to the good faith estimate you reviewed and signed earlier in the home buying process. If it looks good, you’re ready to close!
Some closing processes take longer to complete than others, meaning the closing day gets delayed for days or even weeks. There are several possible reasons for this, such as the following:
Financing issues: According to recent research, 46% of closing day delays are due to financing problems. This means there’s an issue with getting funding for your house. It may be because you no longer qualify for the home loan you applied for, possibly because you increased your debt-to-income ratio by taking on a new credit card during escrow. Granted, sometimes it’s simply due to a missing financial document that will only take a few days to correct.
Low appraisal: Another issue you might run into is your home appraising for less than your offer price. It will take some time to negotiate with the seller, come up with more money out of pocket, or switch lenders if necessary.
Contingencies: If there are contingencies involved, these might take time to figure out. A common example is when the buyer has to sell their current home before buying the new one. Similarly, the seller might have to buy a new home before agreeing to move out of the old one. These contingencies can cause delays.
Homeowner’s insurance: You have to get insurance before you can close on the home. If you don’t have it in place before closing, you’ll delay the process.
Title issues: If it turns out the seller has a lien on the house, it can’t be sold until it’s resolved. This kind of problem is supposed to be discovered and fixed during the title search in escrow, and sometimes it takes longer than it should to smooth out.
Delays on repairs: If you asked the seller to make repairs, and the issues haven’t been fixed by closing day, you might have to delay closing until this is done. Similarly, if you find new problems—or issues that haven’t been fixed—during the final walk-through, you can delay closing until the repairs are made.
If you’re asking, “how long does it take to close on a house?” because you simply can’t wait for closing day to get here, there are a few ways to speed it up. They include the following:
Get pre-approved for a loan: You can avoid most financing issues during escrow by getting pre-approved before you even look for a house. This way, there are no surprises for your lender—as long as you don’t open any new credit accounts during escrow, as doing so could change your creditworthiness.
Schedule the inspection early on: A lot of the tasks on the to-do list during escrow are initiated by your lender, real estate agent, or other professionals in this industry. But the home inspection is initiated by you, as you order and pay for it. This means you have control over how fast this task gets done, so you should schedule it as soon as the seller accepts your offer. Be sure to request repairs soon after you receive the inspector’s report, too.
Prepare for the worst when it comes to appraisal: You can’t usually control how much the house is appraised for, but you can control how you react to it. This means you should be ready to negotiate with the seller in case you have to offer less due to a low appraisal. If it’s a seller’s market and you’re worried the seller won’t accept less, be prepared to either pay the difference with cash or switch lenders. This means having some backup money set aside just in case, or having another lender or two in mind so you can get another appraisal.
Focus on good communication: You’ll be expected to respond to questions, sign documents, schedule appointments, and send over proof before closing day. The faster you can do all this, the higher chance you have of closing day being right on time! Also, be sure to communicate well with your real estate agent. Don’t hesitate to ask questions as soon as you think of them so you can get fast answers before closing day.
We know the escrow process leading up to closing can feel like it’s taking forever, as you just want to move into your new house and start making it your home! But there’s no getting around having to wait at least a month for those keys. In the meantime, you should be able to lean on your real estate agent to get answers and support all the way up to closing day. If you don’t have an agent you can rely on, let LemonBrew match you with a Partner Agent who will help you from start to finish. We even feature the title and escrow services you’ll need for closing (averaging 7 days for these services), as you can go through LemonBrew Abstract for title insurance, closing of escrow, and more. Contact us today to learn how we can help!