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.
