How Long Should It Take to Close on a House?
Closing on your mortgage is an exciting time. It’s the long-awaited event at which you finally get the keys to your new home — after signing a huge stack of documents, of course. But the process of closing, from the time your offer is accepted to when you can move in, can be a time-consuming one. Here’s what you need to know.
What’s the average time to close on a house?
The average time to close is 46 days, according to a 2018 Origination Insight Report from mortgage software company Ellie Mae. Generally, most people will close on their home within 45 to 60 days, said Karen Hoskins, acting vice president of national homeownership programs and lending at the housing nonprofit NeighborWorks. But there are several things that have to happen within that time frame, including a home inspection. If that’s delayed, the process can take longer.
What happens before a mortgage closing?
Between the offer and the closing, you’ll need to jump through a number of hoops.
Inspections and appraisals. An official home inspection is typically a contingency of the sales contract, Hoskins said. The home will also typically need an appraisal and a pest inspection to take place before the closing date.
Final communications with the lender. While these steps are finishing up, you’ll receive a Closing Disclosure from your lender three business days prior your scheduled closing date. This document outlines several important details about your new mortgage, including your loan term and interest rate, estimated monthly payments, fees and closing costs. Be sure to review your Closing Disclosure and contact your mortgage lender with any questions or concerns you have.
Walk-through. Your final walk-through of the home also happens before you get to the closing table. Make sure the property is in the agreed-upon condition and alert the home seller to any problems before your closing.
What happens at a mortgage closing?
The mortgage closing, also referred to as a “settlement,” is the last step on your homebuying journey.
At this meeting, you’re likely to see the following people, according to the Consumer Financial Protection Bureau:
- Your real estate agent
- Your attorney
- Your title insurance company
- Your lender
- An escrow company
- The seller’s attorney
You’ll supply the cash you need to close, including your down payment and closing costs. You’ll also sign all the necessary documents. Once the closing process is complete, you become the legal owner of your home and are then responsible for repaying the mortgage issued to you.
Things that can delay your mortgage closing
A mortgage closing only happens “when all the conditions of the contract have been met,” including full loan approval and evidence of a clear title, according to Fannie Mae.
If there’s a hiccup with any of the items that need to be in place before your scheduled closing date, there may be a closing delay. Here are some common issues that can derail your mortgage closing.
It may get frustrating and repetitive at times, but you must submit any and all documentation your mortgage lender requests in order to ensure you won’t run into any closing delays on your end. Common documents include bank statements, pay stubs, tax returns, etc. Additionally, depending on how much time has passed since your preapproval, your lender may also need an updated version of your credit history. Most mortgage preapprovals last about 90 days.
Try not to apply for new credit, such as an auto loan or credit card, while you’re still in the homebuying process. First, this creates a new credit inquiry, which causes your credit score to drop. Then, there’s the new debt being added to your credit profile, messing with debt ratios and lowering the average age of the accounts included on your credit report — both of which can lower your score. A lower score can impede your mortgage approval or increase your interest rate.
Any problems found during a home or pest inspection can hold up a mortgage closing, Hoskins said.
Any structural issue or problem with the major appliances and systems in the house you discover will need to be addressed before the home purchase can move forward. This can involve negotiations between the buy and seller, which takes time, Hoskins said.
Any issue you have collecting the money you need to close can also delay a mortgage closing. For example, if you have “layered financing,” such as down payment or closing cost assistance in the form of a forgivable loan from a housing finance agency or other entity, that financing has to be squared away prior to your scheduled closing date.
“The paperwork and everything for both transactions have to be in place and ready to go,” Hoskins said.
This also applies if you’re solely responsible for your cash to close. Be sure your money is accessible before your closing date.
There are a host of other issues that can delay your mortgage closing. Hoskins said she’s seen issues come up when, during the title search, there’s a lien on the property that must be cleared before the closing can take place.
Other issues that can impact closing include appraisal delays and — for new homes specifically — construction delays.
The bottom line
There are several hurdles you have to clear before you make it to the closing table, but stay focused and remember that it’s all part of becoming a homeowner.
If you ever feel uneasy about the documents you need or anything else related to the closing process in general, don’t hesitate to contact your real estate agent or lender for clarity.
Another resource for assistance is reaching out to a Department of Housing and Urban Development-approved housing counselor for more help understanding mortgage closings and the related paperwork.
“It’s advisable if they have someone like a housing counselor to review that documentation with them, so that if there’s anything that is glaring to that counselor that might be of concern, all of those issues are addressed prior to getting to settlement,” Hoskins said.