Are you wondering how long it takes to close on a house? The time to finalize a real estate transaction can be a mystery to many buyers who have never purchased.
One of the questions I get from home sellers is what they can expect the time frame to be from start to finish. Those who are buying a home for the first time also ask as well.
Closing on a house can be a tense experience and one you might want to be over as soon as possible.
Getting an accepted offer is exciting, but all the hard work begins with going through the buyer’s home inspection process, packing, hiring a moving company, and the moving day itself.
All of these things can be grueling both physically and emotionally.
It can be easy to think that a delay spells disaster for the closing time, but it could only mean a slight hold-up in progress.
The time to close on a house will depend on many factors. Some of these factors will be within your control, and some won’t.
If you are asking, how long does it take to close on a house? The answer will be down to how smoothly the closing stages are completed and how people deal with their responsibilities. The current housing market will play a significant role.
Let’s look at the issues involved in closing delays and the average time to complete.
How Much Time Is Needed to Close a House?
How long will it take to close a property once an offer is accepted?
According to Ellie Mae, the average time to close a house is 52 days for the loan. Ellie Mae is a company that processes 35% of mortgages.
This is higher than usual, though not the longest wait borrowers have recently endured.
For example, in December 2020 and January 2021, the average time to close home loans was 58 days.
However, the time it takes for your home to close could vary significantly from these averages. Closing could be faster or slower in your area, and other factors also have an effect.
When I counsel my seller clients about the expected time frame, I tell them 45-60 days. These are the average closing times for my area.
Of course, nothing is cast in stone, and a buyer could be looking for a longer or shorter time frame. Real estate market conditions often dictate the time to close a house.
A home seller might also have specific requirements on when they would like to close.
There is currently more demand for homes, with houses staying on the market for under three weeks on average. This leads to more demand for the professionals involved in the closing.
Inventory, however, has been scarce, so this has not led to burdening conditions that would slow down the process.
While it may only take an hour to sign the paperwork when it’s time to close on a house, the mortgage lender, title company, home inspector, and appraiser have jobs to do before you get to that stage.
Closing Time Frames Explained
The closing process begins once the seller has accepted an offer and the home is under contract. The period will end when the buyer finally signs the paperwork at the closing table.
However, a lot of things can happen in the time between those two events.
Everyone will better understand the closing timeline once a purchase contract has been agreed upon and signed.
The purchase agreement between the buyer and the seller means that the price has been agreed upon, and the other negotiation points will be detailed in the contract.
The property will be moved into contingent status.
The agreement will state how much earnest money the buyer will put in escrow, contingency requirements, what the buyer will be mortgaged, and when they will have their mortgage commitment.
The contract should also give you a closing date, though this can be subject to change. This data will help schedule the different stages of the process.
But if things go wrong, the buyer or seller might renegotiate the date.
Some of the critical steps within the process include:
- Offer and negotiation
- Contingencies
- Escrow
- Home inspection
- Repairs and renegotiation
- Mortgage application
- Appraisal
- Mortgage approval
- Clearing the title
- Buyers getting homeowner’s insurance
- Final walkthrough
If all these stages and others go well, you can expect to wait at least a month to close. There are, however, many things that can happen that can slow down the closing process.
Your Realtor should be experienced in handling these problems when they occur to keep the process on track.
You may need to make decisions, which can sometimes be difficult, during the process to continue with the transaction.
Common Types of Delays That Slow Down Closing Time
Around a quarter of all home sales get delayed during closing. Most of these will close eventually, but 7% don’t.
The most frequent problem that comes up to slow-down closing is buyer financing.
A mortgage application should be made timely, as the purchase contract indicates.
Let’s look at some common issues that could slow the time frame by several days or longer.
Buyer Financing Problems
There isn’t much you can do as a seller if your buyer has problems getting financing. The mortgage process is what it is.
The buyer will ensure they work with their mortgage lender to continue their purchase.
Problems can arise for a few different reasons. The buyer’s financial situation could have changed since getting preapproval, and now they don’t qualify for the mortgage they expected.
Maybe their income ratio changed, or they made an unwise large purchase. Perhaps the buyer has failed to provide the required financial documentation necessary to the lender.
Lenders will ask buyers for numerous financial documents when getting a home loan. The need for documentation will start at the loan application and continue until final approval.
Sometimes, a lender will ask a buyer for bank statements, tax returns, or other paperwork that slows the underwriting process.
On occasion, when the lender reruns a buyer’s credit report, a newly discovered issue will surface that impacts the buyer’s credit score. Usually, these are just minor blips in the grand scheme of things and are rectified without a problem.
Buyers are often asked for additional documentation that may clarify any doubts on the lenders’ part that they are good candidates for a loan.
Lender requests for these items usually clear up any uncertainties.
The Mortgage Program Can Impact The Time to Complete a Sale
The type of loan the buyer chooses can also have some bearing on how long it will take to get a financing commitment.
For example, certain loan types, like FHA loans, tend to take slightly longer to get than conventional loans.
If the buyer is a borderline candidate for a mortgage and their interest rate goes up, this could also cause an issue. The loan amount may need to change.
Things can stay on track when the buyer is prepared to quickly deal with the lender’s requests, starting with the application process.
Having a great loan officer can help the process progress smoothly. The mortgage lender a buyer uses can substantially impact how quickly a real estate transaction moves. Also, the underwriter at one lending institution may be longer than another. Mortgage underwriting is always an unknown variable.
When reviewing mortgage programs, buyers should ask their lender the expected time frame to get a mortgage commitment.
Timetable to Close on a House With a VA Loan
VA loans are slightly longer for a commitment, much like FHA loans. You can expect the time to complete a sale with a VA loan to be about a week longer than with a conventional loan.
You need lender approval, and the Veteran’s Administration must also approve the financing. Having an extra step causes the time to finish a transaction to increase.
Getting a Loan Estimate
While cash is king, most home sales have a buyer getting a mortgage. One of the requirements when getting a mortgage is being provided a loan estimate from the lender.
The loan estimate explains all of the costs associated with your loan. When given your loan estimate, the lender has not approved or denied your mortgage.
The loan estimate used to be called the “good faith estimate” before changing the name.
What is TRID, and How Does it Impact The Schedule to Close?
TRID stands for TILA-RESPA Information Disclosure. It is a law designed to inform and protect consumers when applying for a mortgage. TRID can impact how long it takes to finalize a real estate transaction.
Under TRID guidelines, a lender must provide a borrower with a loan estimate and a closing disclosure.
The disclosure is provided when you are ready to sign off on your mortgage. The disclosure offers borrowers the exact cost breakdown as the loan estimate.
Borrowers must ensure the costs have not changed dramatically between the two agreements. TRID helps avoid unscrupulous lenders who use bait-and-switch tactics to get more loans.
The way TRID can have some influence on a closing date is by providing a buyer a legally required 3-day grace period on verifying costs. Borrowers have at least three days to back out of a mortgage loan without losing money. This is referred to as having the right of rescission.
Buyers must inform their lender that they have verified their closing disclosure, which starts in three days.
Home buyers are verifying all their closing costs are accurate as presented. If buyers do not do this promptly, it could impact the closing time.
TRID documents are required paperwork the mortgage company provides and are not optional.
Title Delays Can Impact How Long It Takes to Close on a Property
Title issues are another potential stumbling block for a closing as scheduled.
The buyer’s lender will conduct a title search to ensure no encumbrances on the title.
Home closings can only occur on the property once any property liens, judgments, or bankruptcies have been cleared.
If this is holding up the sale, it is the responsibility of the seller to deal with it.
Issues with the property’s title can lead to delays that take months to resolve. If you are selling a home and run into this problem, hiring an attorney specializing in real estate might be best to deal with the complications.
There is a way for sellers to avoid most of these problems and deal with them early. The seller’s real estate attorney should be able to order a preliminary title report before the home is put on the market.
This will give the seller sufficient time to deal with problems before they become a factor that will delay things.
Most lenders, attorneys, and real estate agents recommend buyers purchase title insurance to avoid potential title issues when it comes time to sell.
Title problems can impact how long it takes to close a home severely if the issue is substantial.
Schedule to Finalize After The Title Search
A title search is usually not conducted until well into the purchase process. It could happen as late as a couple of weeks before closing.
Timeframe For Finalization After The Home Inspection
Many buyers will ask their real estate agent the time it takes to finalize a sale after the inspection.
Home inspections typically take place anywhere from a day to 2 weeks from the execution of the offer. So, the closing is usually anywhere from 30-45 days from the completion of the inspections and any negotiations.
The buyer will want a home inspection to ensure the property has no significant issues or defects. The inspector will assess the home to ensure it functions correctly and find any areas of concern. There is likely to be a contingency based on the home inspection.
Usually, the due diligence period for a buyer conducting inspections is between 7-14 days.
This inspection can take a few hours, and the report should be available within a few days. It is unlikely that the home inspection won’t find anything wrong with the property whatsoever.
But if the inspector finds something seriously wrong with the property, you can expect delays or even for the buyer to walk away with their earnest money returned.
Significant problems with the home could include structural damage, electrical or plumbing issues, a leak in the roof, or a pest infestation.
Negotiations Can Stall The Agreed Upon Closing Date
If the inspector finds anything like this, the buyer will likely want to negotiate repairs, the price of the home, or a seller concession.
These negotiations can slow the progress to closing, but there could be a more significant delay if repairs are required.
There will likely be a few minor issues in the inspector’s report. The buyer may request that the seller repair these minor issues before things continue. This will mean that the seller needs to hire someone to make the repairs, but to stay on track with closing, this must be done quickly.
The seller can pay for a pre-inspection to prevent this potential delay from slowing things down. While this will be an extra expense for the seller, it will reveal problems with the home they probably didn’t know about.
The time it takes to close after the inspection is done will depend on if there are any significant issues.
Since most inspections are performed within 7-14 days of the accepted offer, you can cut a week or two off the expected time frame.
How Long After The Appraisal Is The Closing?
The appraisal to the closing timeline is generally 30-45 days. Lenders usually order appraisals a short time after the contract has been executed. The mortgage volume for purchases and refinances can impact how quickly an appraisal is ordered and completed.
Most of the time, even if the appraisal is completed later in the process, it does not delay the time to close. However, appraisal issues can.
Appraisal Issues Can Potentially Delay The Time It Takes to Close.
The home appraisal can be another stumbling block in progress. The appraiser might find that the home is valued less, more, or about the same as the buyer’s offer.
When you have a low appraisal, there is a chance the closing time could be affected if the issue is not resolved promptly.
A few things can happen if the home is valued for less money than the buyer has offered. It may mean the buyer wants to renegotiate their offer price if they cannot compensate for the value difference.
If the buyer has additional down payment funds, this could satisfy the lender moving forward. Sometimes, a compromise is a combination of both happening.
The seller will come down in price, and the buyer will put more money down.
There is an option to challenge the low appraisal on the home, but this is unlikely to be successful unless the appraiser has made mistakes.
The only likely consequence is that it will delay the process further.
When there is a problem with an appraisal, renegotiation on the price can be dealt with within a few hours if you are lucky, but it could take weeks.Click To TweetHow long does it take to finalize after the appraisal is done? It depends on how quickly the lender orders the appraisal and the appraiser visits the home. The passing of papers could take only a few weeks after the assessment is completed.
Buyer’s Current Home Sale Getting Delayed May Impact The Closing Schedule
Another potential problem that could cause a delay is if the buyer has a home to sell that gets pushed off.
Real Estate agents like to call these the dominoes in the sale. If the buyer needs to sell their home and gets delayed for whatever reason, it will impact the finalization of the second home in line.
Tips to Help Avoid Closing Delays
With all the separate parts involved in the process, only a few things are within your control to ensure minimal delays.
As the home seller, you should only deal with buyers pre-approved for a loan. It should make the buyer’s financing more straightforward and faster during closing.
If the buyer wants repairs highlighted in the home inspection, ensure you don’t delay hiring someone to deal with the issue.
Don’t take too long on your decisions. When negotiating with the buyer, taking your time over difficult decisions and concessions can be easy.
To keep the closing date in the purchase contract, you should act decisively in your decision-making.
How Long Does it Take to Close On a House With Cash?
Cash and no contingencies are kings for speeding up the time for ending sales. The time it takes to buy a property when a buyer is paying cash, it’s much quicker!
Paying cash will speed things along quickly, given there is no mortgage in the home closing process. Sellers love a cash deal as it avoids so many problems that can happen in a home purchase. Much of the anxiety is removed when sellers don’t have to worry about a buyer’s funding or debt.
If you are lucky, the easiest way to have a quicker and more certain closing time frame is to accept a cash offer on your home. With a cash offer, you avoid dealing with a buyer needing loan approval. Not waiting for mortgage approval can shave off significant time for closing.
You might be able to finalize a transaction as quickly as a week when it is a cash transaction. You might be sitting at a closing table much quicker than ever.
Cash offers are, in fact, one of the perks of selling to a real estate investor or iBuyer. These entities can finish extremely fast.
Cash buyers eliminate many problems that can crop up in a real estate transaction. A bank is not waiting to deliver the mortgage approval letter to a buyer.
How Long to Close On a New Home?
While closing on a resale home has certain expectations and norms, new construction is an entirely different animal.
The time from the offer to finalizing a new home depends on a few factors. Has the house been started yet?
New construction time frames vary depending on the builder, how large the home is being built, and local building departments.
A smaller home could take 3-4 months to build, while a more significant, custom home could take anywhere from 6 months to a year or longer if it’s a luxury property.
If you go with a modular home, the time could be shorter as they are a quicker housing choice to construct.
Another quirky home choice that is becoming popular in some states is a shipping container home. This property will also have a shorter build and closing time frame.
The Final Walkthrough Could Delay a Closing
It is customary for homebuyers to do a final walk of the property before closing. Having a final walk is a good idea to ensure the property is in the same condition as when the offer to purchase was made. It is the last step before heading to closing.
If issues are discovered, this could potentially impact the scheduled time.
If issues are discovered, sometimes it will continue as scheduled, but an escrow account will be created to hold back money from a seller to ensure the problems are corrected.
What is The Longest Time to Complete a Sale on a House?
There is no maximum time frame for finalizing a purchase. A longer time frame could be desirable to both parties.
It could take a year or more to finalize if the parties desire this time frame.
What Happens on Closing Day
If you have successfully navigated past all the previous issues, you have the last step: closing day.
An appointment will be made between the buyer’s lender, the seller, and a title company or attorneys representing the parties.
A closing agent or attorney will be assigned to review all the paperwork a buyer will sign.
Unless otherwise agreed, it will typically occur at the attorney’s office representing the lender or the title company. The finalization takes place rather quickly.
The final process should be over in under 1.5 hours and involve essential documents in the home sale. This will include the property deed, the mortgage, the note, the bill of sale, and documents relating to the closing disclosure.
Buyers must bring a cashier’s check to make up the difference between their home loan and purchase price. A cashier’s or bank check is needed to ensure the funds are good. The agent will collect these funds.
Typically, the buyer must attend to sign the documents, whereas the seller can sign their paperwork in advance.
Once all the essential documents have been signed, the paperwork will be recorded at the local registry of deeds. At this point, the property is considered sold.
So, the closing itself only takes a short time to complete. Many home closings last under an hour; some are as quick as 15 minutes to complete. For most folks, the day is painless and a time to celebrate.
Moving into your dream home will now be a reality.
Documents to Be Signed at Closing
A buyer will be expected to sign numerous documents at the closing table, while the seller will have very few.
As a buyer, you should expect to sign the following documents:
- As you might expect, the promissory note is your agreement to pay the mortgage loan fully. It also provides the mortgage terms of your loan.
- The mortgage note details the mortgage terms, such as your borrowing amount and how much money you’re putting down.
- The escrow disclosure provides the details surrounding your escrow account, including how much you will pay each month, including insurance and taxes.
- The deed of trust – the deed of trust agreement allows your lender to foreclose on the property if you don’t make mortgage payments or violate the other loan terms.
9 Exciting Facts About Real Estate Closings
Final Thoughts
If you need to get through the process quickly, follow our tips to ensure you don’t add time from the offer to closing. Understanding the timeframe it takes to finalize a sale, from the time of the proposal to attending an ending, is essential when you haven’t bought a home or sold it in a long time.
About the Author: The above Real Estate information on how long it takes to close on a house was provided by Bill Gassett, a Nationally recognized leader in his field. Bill has expertise in mortgages, financing, moving, home improvement, and general real estate.
Learn more about Bill Gassett and the publications he has been featured in. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-625-0191. Bill has helped people move in and out of Metrowest towns for the last 37+ years.
Are you thinking of selling your home? I am passionate about real estate and love sharing my marketing expertise!
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