How Long Does It Take to Close on a Home?
How Long Does It Take to Close on a Home?
Buying a house is exciting and overwhelming all at the same time. Not only must you find the home you want, but you must secure financing, too, unless you’re paying cash.
The financing part causes a lot of stress for most people because they don’t know what to expect. One of the largest concerns I hear about is: how long does it take to close on a home?
How Fast Can You Close?
When you sign a purchase contract, it’s natural to want to close right away. But it takes time. While it varies by lender, the national average is 48 days. With higher interest rates and a slow in the industry overall, you might see faster turnaround times, though.
In my experience, the fastest we’ve closed is 12 days. Some lenders advertise that with their product and team effort, you can close in 8 days, and I have seen that. But really, you just want everything to go smoothly and properly - as your loan processor, that’s how I can certainly make your life easier!
The Loan Closing Process
You might wonder what takes so long to close on a home. It helps to understand the steps lenders go through.
1. You get pre-approved before you look at homes. This allows the lender to review your credit score, income, assets, and liabilities. They use this information to make sure you qualify for any of their loan programs. As my team and I are mortgage brokers, we can generate a proper pre-approval letter for you before you begin home shopping. This is important because you will know your buying power before you start looking, and you will then be able to see what you can afford, and that saves a lot of time.
2. You work with a reputable real estate agent to find your dream home and sign a purchase contract. Once signed, you give the lender (us) the contract along with any other conditions you can satisfy according to your pre-approval letter.
3. You open escrow. This is where you put money down in ‘good faith.’ This tells sellers you’re a serious and qualified buyer and are willing to risk your funds. A neutral third-party escrow company holds the funds until you close. This could be a title company, or attorney.
4. The lender orders an appraisal and title work on the property. This information tells the lender if the home is a good risk. Is it worth at least as much as you’re paying? Is the title clear? In other words, is the chain of ownership legal and are there any outstanding liens aside from the seller’s current mortgage? This process could take a couple of weeks. Usually, in my experience, it takes less than a week. Sometimes title work comes back within a couple of days. I have seen that happen.
5. Clear any outstanding conditions. At this point, to get to a clear to close, you must provide any straggling documentation the lender needs. Sometimes other issues come up when they review your paystubs, verify your employment, or look at your asset statements. Stay in touch with your loan officer and your loan processor (me!) and provide documentation as quickly as possible. I can help you understand any questions you may have on what exact documents you need to gather.
6. Close on your loan. Once you have the ‘clear to close,’ you’re free to close on the loan and take ownership of the home. The closing will be scheduled. You may or may not require a mobile notary. That might change the timing of things a bit.
Final Thoughts
As your mortgage broker, my team and I can access dozens of different lenders for you. We work with you to develop a plan that utilizes the most suitable lender for your needs. We are very familiar with the turnaround times and procedures of many of the lenders, so we’ll advise you on who is the best to go with. It’s always worth asking a lender what their turnaround time is, especially in today’s market. Some lenders are moving much faster than others. If you have a closing date that’s sooner than 30 – 45 days, we will make sure we find you a lender that can work within that timeline.
Some of how fast you close a loan depends on how well you cooperate with the loan officer and processor. The faster you provide the documentation we require, the faster we can clear your loan to close!