How Long Does it Take to Close on a Home?
The earlier the better!
Closing on a home is no exact science. Time ranges vary depending on the market, lender, property, type of loan, and complexity of the transaction.
Above all, how you pay for your home has the most impact on the speed of the closing process. Cash payments in full being the quickest — taking as little as 7 days.
However, the most common method is a mortgage financed purchase.
The general consensus is that closing on a home using a mortgage takes an average of 45–60 days.
The 2 Phases of the Closing Process
After the initial offer is made, the buyer and seller begin negotiating the terms of the deal — including the most important factor, price — and will set the targeted closing date.
After wrapping up negotiations, the first part of the closing process begins. You have officially entered escrow — basically, everything between negotiations and the actual closing day.
Escrow is also where most of the potential closing delays lie in wait.
After the conclusion of escrow, the second phase of the closing process — when you actually finalize the deal and sign all the contacts — is closing day!
Escrow
The following are general steps for a mortgage escrow and average time frames for each. These factors vary depending on the market, lender, property, and type of loan (with first-time homebuyer programs, VA and FHA loans taking longer due to stricter application requirements).
Execute the contract and confirm closing date
Open the escrow account (a few days)
Home inspections (1–2 weeks)
Mortgage application and underwriting (5–20 days)
Appraisal (1–2 weeks)
Acquire homeowner’s insurance and title insurance (1 day)
Get loan approval (1 day)
Final walk through (1 day)
Closing Day
After you make it through escrow, you are ready for the last leg of your home buying journey. Closing day is the day where you meet with a real estate attorney and real estate agent to finalize your purchase.
Fortunately, this is the quickest part of the process — typically involving about 1 to 2 hours of signing and reviewing contracts.
The most common contracts a buyer should expect when using a mortgage include:
The promissory note: a commitment to repay the loan to the lender (not applicable if not using mortgage financing)
The mortgage: gives the lender the right to foreclose on the property if you don’t pay (not applicable if not using mortgage financing)
The escrow disclosure: details the charges that will be incorporated in your monthly tax and insurance payments
A right-to-cancel form: this allows three business days to back out of the whole deal
Fair warning, there will also be a hefty helping of disclosures, disclaimers and government-mandated documents to fill in the rest of the process.
Most Common Delays
As mentioned before, most delays lie in the escrow stage of closing since it is where a bulk of the work takes place.
Buyer financing issues are the most common cause for closing delays during escrow, as it is the biggest part of the deal. This can be due to many factors such as changes in appraisal amounts, missing financial documentation, insufficient buyer income, or an inexperienced loan officer.
For the buyer, the entire mortgage approval process is extensive. The lender will require a comprehensive examination of buyer income, employment history, and asset holdings.
Following the examination, the loan officer conducts a thorough review of both your qualifications and the property before sending your file to be reviewed by underwriters. This is why having an experienced lender, familiar with the process, becomes crucial.
Some major Seller-side delays result from:
- Title/deed issues — liens, bankruptcies, or anything that puts the ownership of the home in question can be a big setback, often taking months to settle. A real estate agent, or real estate attorney, can take steps to proactively prevent delays before putting a home on the market.
- Home inspection delays — most offers are contingent on clean home inspections, so any major issues to the home could mean the end of the deal entirely. Pre-inspections can be a good idea if sellers are willing to pay the money before listing.
- Appraisals — home appraisal values under or over the initial offer amount can pose problems for both parties. The buyer and seller will have to renegotiate or get a second appraisal to come to an agreement. This can last a day, or longer depending on how long it takes to resolve.
Speeding Up the Process
There are also a few things the buyer can do to help speed up the closing process:
- Plan to pay in Cash/ Get pre-approved for a home loan before searching for a home: the mortgage application is the longest part of the process and doing the legwork before searching for homes will help save time by narrowing your list to homes within your budget
- Schedule inspections as soon as possible: as soon as your offer is accepted. And after receiving the inspection report, you have the opportunity to request repairs from the seller (who will also have a few days to respond to the request)
- Hire an experienced lender: experienced professionals can help to guide you through the process as efficiently as possible
- Search for Online lenders: online lenders may help to further optimize time savings. This is a fairly newer option, popular among younger lenders
