It
is important for homebuyers to know how long it may take to close on a house
once their purchase offer is accepted. Except where the deal is all-cash, the
buyer’s lender will take some time to process the loan and close.
If
you are well-prepared with all the necessary information and documents your
lender may require, the closing process could be hastened.
However,
chances are that you may still face situations where you have to discuss or
negotiate with the other party. Indecisiveness or inaction will only make the
closing process longer in these situations.
Average Time Taken for Home Closing
For
a new home purchase, according to Fannie Mae, the average closing time is 46
days, while for mortgage finance it is 49 days. A similar time period for closing
is also involved in FHA loans.
The
closing process is often expedited if the loan has been pre-approved (rather
than pre-qualified). If the buyer’s bank statements, employment record, and
credit report have already been verified, closing on the property will usually
take place within one to two weeks.
Estimated Timeline for Closing
- Completing
the official loan application – 1 day
- Official
loan disclosures (and loan estimate) – up to 3 days
- Additional
document requests and review – 4 to 7 days
- Appraisal
process – 7 to 14 days
- Underwriting
– 1 to 3 days
- Conditional
loan approval – 7 to 14 days
- Cleared
to close – 3 days
- Closing
and loan disbursement – 1 day
Factors that can Delay Home Closing
In
many cases, delays in closing on a house occur at a stage when the file has
been submitted to the underwriters. While an experienced loan officer would be
well-versed with underwriting guidelines, it is difficult to predict how an
underwriter would respond.
Delays
are more frequent with institutional lenders than with mortgage brokers because
their procedures may be longer and slower. Here are some of the key issues that
could delay or even prevent closing on a home.
Credit Report
Issues
If
your credit report reveals questionable items, such as a sudden decline in
credit score, new debts, errors, or a major late payment reported recently, it
could cause a delay in closing.
Lower Appraisal
Lenders
usually ask for an appraisal of the home before they finance it. If the
property appraisal turns out to be lower than the asking price of the seller,
your loan may be refused. You may either have to pay the difference from your
pocket or renegotiate your terms with the seller for the loan to be cleared.
Home Inspection
Raises Concerns
The
home inspection may result in adverse findings, such as faulty wiring or
leakage in the bathroom. Repairs will have to be undertaken before the home
closing can be done.
Need for
Additional Documents
In
some cases, the lender may ask for additional documents to explain some
doubtful aspects related to your finances. For instance, a document may have a
discrepancy about your marital status, or a bank statement may show your maiden
name, or some insurance information may be missing.
Problems with
the Title
The
home sale may be delayed if there are problems with the title, such as lien.
Clearing the title may take time and cause a delay in home closing.
Unforeseen
Changes with Financial Impact
Right
before the closing, any unforeseen life changes with substantive financial
impact, such as a divorce or loss or job may also result in a delay.
Inexperienced
Loan Professionals
In
some cases, both the buyer and the seller may be diligent in accomplishing
their role in the process, but the professionals handling your loan may be
inefficient.
What can you do to Minimize Delays in Home Closing?
In
order to close on your house in a smooth and timely manner, be prepared to
respond actively to the requests made by your real estate agent and your
lender. While you have no control over how other parties in the value chain
perform their role, you can make sure that no delay occurs because of you.
Any
time you receive a request for information or documents from the lender, you
should be ready to produce it as soon as possible.
Anticipate
the requirements and keep ahead of the curve to ensure your home closing
process does not drag on like an episode of that 90s show Mad About You.
Don’t move out of
your current place of residence until you can actually move into the home you
are buying. You don’t want to be sleeping in your car for a few nights or have
to get a hotel.
It is important for homebuyers to know how long it may take to close on a house once their purchase offer is accepted. Except where the deal is all-cash, the buyer’s lender will take some time to process the loan and close.
If
you are well-prepared with all the necessary information and documents your
lender may require, the closing process could be hastened.
However,
chances are that you may still face situations where you have to discuss or
negotiate with the other party. Indecisiveness or inaction will only make the
closing process longer in these situations.
Average Time Taken for Home Closing
For
a new home purchase, according to Fannie Mae, the average closing time is 46
days, while for mortgage finance it is 49 days. A similar time period for closing
is also involved in FHA loans.
The
closing process is often expedited if the loan has been pre-approved (rather
than pre-qualified). If the buyer’s bank statements, employment record, and
credit report have already been verified, closing on the property will usually
take place within one to two weeks.
Estimated Timeline for Closing
- Completing
the official loan application – 1 day
- Official
loan disclosures (and loan estimate) – up to 3 days
- Additional
document requests and review – 4 to 7 days
- Appraisal
process – 7 to 14 days
- Underwriting
– 1 to 3 days
- Conditional
loan approval – 7 to 14 days
- Cleared
to close – 3 days
- Closing
and loan disbursement – 1 day
Factors that can Delay Home Closing
In
many cases, delays in closing on a house occur at a stage when the file has
been submitted to the underwriters. While an experienced loan officer would be
well-versed with underwriting guidelines, it is difficult to predict how an
underwriter would respond.
Delays
are more frequent with institutional lenders than with mortgage brokers because
their procedures may be longer and slower. Here are some of the key issues that
could delay or even prevent closing on a home.
Credit Report Issues
If
your credit report reveals questionable items, such as a sudden decline in
credit score, new debts, errors, or a major late payment reported recently, it
could cause a delay in closing.
Lower Appraisal
Lenders
usually ask for an appraisal of the home before they finance it. If the
property appraisal turns out to be lower than the asking price of the seller,
your loan may be refused. You may either have to pay the difference from your
pocket or renegotiate your terms with the seller for the loan to be cleared.
Home Inspection Raises Concerns
The
home inspection may result in adverse findings, such as faulty wiring or
leakage in the bathroom. Repairs will have to be undertaken before the home
closing can be done.
Need for Additional Documents
In
some cases, the lender may ask for additional documents to explain some
doubtful aspects related to your finances. For instance, a document may have a
discrepancy about your marital status, or a bank statement may show your maiden
name, or some insurance information may be missing.
Problems with the Title
The
home sale may be delayed if there are problems with the title, such as lien.
Clearing the title may take time and cause a delay in home closing.
Unforeseen Changes with Financial Impact
Right
before the closing, any unforeseen life changes with substantive financial
impact, such as a divorce or loss or job may also result in a delay.
Inexperienced Loan Professionals
In
some cases, both the buyer and the seller may be diligent in accomplishing
their role in the process, but the professionals handling your loan may be
inefficient.
What can you do to Minimize Delays in Home Closing?
In
order to close on your house in a smooth and timely manner, be prepared to
respond actively to the requests made by your real estate agent and your
lender. While you have no control over how other parties in the value chain
perform their role, you can make sure that no delay occurs because of you.
Any
time you receive a request for information or documents from the lender, you
should be ready to produce it as soon as possible.
Anticipate
the requirements and keep ahead of the curve to ensure your home closing
process does not drag on like an episode of that 90s show Mad About You.
Don’t move out of
your current place of residence until you can actually move into the home you
are buying. You don’t want to be sleeping in your car for a few nights or have
to get a hotel.