You’re almost there. You’ve done your research, assessed your financial situation, and weighed your options. You’ve shopped around until you’ve found the perfect lender and the perfect home. You’ve identified the right form of financing, gotten preapproved for a home loan, and had your meticulously crafted offer accepted. Now, the finish line is finally in sight, and you’re left with one question that keeps circling in your head: How long does it take to close on a house?
How Long Does It Take to Close on a House?
When you’re trying to figure out the timeline for closing on a house, the easiest way to get an answer is to look at how long the average buyer spends waiting. However, there’s some variation, so it also helps to understand what needs to happen during that period, and what problems can drag out the process.
The Average Wait
Buyers typically only spend 60 to 90 minutes signing the paperwork that finalizes their purchase at the closing table, but the closing process actually takes much longer. How long does it take to close on a house? As of June 2020, the average wait to close on a purchase loan for a home was 46 days, according to HomeLight. Your own wait may vary depending on an assortment of factors, including your location and the type of financing that you’re using.
The Closing Process
If you’ve found your home and agreed on the price, why does it take so long to close? As a Motley Fool explains, there are actually several things that have to happen during the closing process:
- The Contract: Signing the purchase contract starts the clock on the closing process.
- The Deposit: The buyer generally puts down a small deposit, often called earnest money, that’s held in an escrow account until closing.
- The Inspections: Normally, the buyer has a period of time to order any inspections of the property. Based on their findings, they may opt to proceed, request repairs, or back out of the deal.
- The Appraisal: Lenders insist on this professional valuation of the home as a way to ensure that you aren’t overpaying for the property.
- The Insurance: Purchasing a property means arranging for insurance. At a minimum, title insurance and homeowners insurance are often required by lenders.
- The Contingencies: Contingencies are conditions written into the contract. They often involve things like the inspections and appraisal, but they can also cover the sale of another home or some other circumstance.
- The Financing: Even if you’re preapproved, you’ll still have to get your loan underwritten and approved.
- Closing: The final step that transfers ownership of the home from the seller to the buyer, closing involves signing documents necessary to complete the real estate transaction and transfer the relevant funds.
When Things Go Wrong
Even when everything goes smoothly, the closing process takes time. When things go wrong, it takes longer. The Balance points out that there are many things that can cause problems during closing. A low appraisal, a clouded title, or unexpected conditions revealed by the home inspection could make the property less appealing. Mistakes on the buyer’s credit report or missing financial information could slow down the underwriting process.
What Can You Do to Speed Up Closing?
Although much of what happens during closing is out of your hands, The Mortgage Reports notes that there are certain things that you can do to help keep things moving along:
- Preview your credit. Inaccuracies or mistakes in your credit report could slow down the underwriting process. Pulling your credit report early in the homebuying process, checking it for errors, and taking steps to fix any issues can lessen the risk of stumbling blocks during closing.
- Have your documentation ready. It’s not unusual for your lender to need documentation of your finances or employment. To reduce delays, have that paperwork on hand so that you’re ready to provide it quickly when you get the call.
- Limit life changes. Making big changes like switching jobs, getting married or divorced, or making a large purchase can jeopardize your loan application. Avoid these during the homebuying process whenever possible.
- Stay in touch. Being responsive to requests for additional information or answers is essential to limiting delays.