How Long Will It Take to Close Once an Offer is Accepted?
Are you wondering how long it takes to close on a house? One of the questions I get asked 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 that you might want to be over as soon as possible.
Sure, getting an accepted offer is exciting, but all the hard work begins from going through the buyer’s home inspection process to packing, to hiring a moving company to the moving day itself. All of these things can be grueling both physically and emotionally.
It can be easy to think that a delay in the process spells disaster for the closing time, but it could only mean a slight hold-up in progress.
The amount of 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 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 in the process.
Let’s take a look at the issues involved in closing delays, along with the average time to close on a home.
By the time you’re done readily you’ll be armed with everything you need to know on the time it takes to close on a house.
How Much Closing Time is Needed?
According to Ellie Mae, the average time to close on a house takes 52 days for the loan (in March 2021), the company that processes 35% of mortgages. This is higher than normal, though not the longest wait borrowers have had to put up with in recent times.
For example, in December 2020 and January 2021, the average time to close home loans was 58 days.
However, the amount of time it will take for your home to close could vary from these averages by quite a bit.
Closing could be faster or slower in your area, and other factors have an effect as well.
When I counsel my seller clients about the expected closing 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 there could be a buyer looking for a longer or shorter closing time frame. Quite often, how long it takes to close on a house is dictated by real estate market conditions.
A home seller might also have specific requirements on when they would like to close.
At present, there is more demand for homes, with houses staying on the market for under 3 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 closing 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. The closing 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.
Once a purchase contract has been agreed and signed, everyone will better understand the closing timeline.
The purchase agreement between the buyer and the seller means that the price has been agreed upon, and the other points of negotiation will be detailed in the contract.
The contract should also give you a closing date, though this can be subject to change. This date will help schedule the different stages of the closing process. But if things go wrong, the buyer or seller might renegotiate the date.
Some of the important steps within the closing process include:
- Offer and negotiation
- Home inspection
- Repairs and renegotiation
- Mortgage application
- 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 real estate agent should be experienced to handle 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 in a timely fashion as indicated in the purchase contract.
Let’s take a look at some of the common issues that could slow down the closing time frame by a matter of days or potentially longer.
Buyer Financing Problems
As a seller, there isn’t much you can do if your buyer has problems getting financing. The mortgage process is what it is.
It will be the buyer’s responsibility to ensure they work with their mortgage lender to continue forward with 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.
When getting a home loan, lenders will ask buyers for numerous financial documents. 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 down 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 issue.
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 Closing Time Frames
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. VA loans also tend to be slightly longer for a commitment too.
If the buyer is a borderline candidate for a mortgage and their interest rate goes up, this also could cause an issue. The loan amount may need to change.
When the buyer is prepared to deal with the lender’s requests quickly, starting at the application process, things can stay on track.
Having a great loan officer can help the process progress smoothly. The mortgage lender, a buyer, uses can have a substantial impact on how quickly a real estate transaction progresses.
When reviewing mortgage programs, buyers should ask their lender the expected time frame to get a mortgage commitment.
Getting a Loan Estimate
While cash is king, most home sales have a buyer who is 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 you are 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 the name was changed.
What is TRID?
TRID stands for TILA-RESPA Information Disclosure. It is a law designed to inform and protect consumers when applying for a mortgage. TRID can have some impact on how long it takes to close on a house.
Under TRID guidelines, a lender must provide a borrower with a loan estimate and a closing disclosure.
The closing disclosure is provided when you are ready to sign off on your mortgage. The closing disclosure provides borrowers with the same cost breakdown as the loan estimate.
Borrowers need to make sure the costs have not changed dramatically between the two agreements. TRID helps to avoid unscrupulous lenders who use bait and switch tactics to get themselves business.
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 3 days to back out of a mortgage loan without losing money. This is referred to as having the right of rescission.
Buyers need to inform their lender acknowledging they have verified their closing disclosure which starts the 3 day time period.
Home buyers are verifying all their closing costs are accurate as presented. If buyers do not do this in a timely fashion, it could impact the closing time.
TRID documents are required paperwork provided by the mortgage company and are not optional.
Title Delays Can Impact How Long it Takes to Close on a House
Title issues are another potential stumbling block for a closing to take place as scheduled. The buyer’s lender will conduct a title search to ensure there are 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 something that is holding up the sale, it is the responsibility of the seller to deal with it.
Issues with the title of the property can lead to delays that take months to resolve. If you are selling the home and run into this problem, it might be in your best interests to hire an attorney specializing in real estate 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 closing.
Most lenders, attorneys, and real estate agents will recommend buyers purchasing title insurance to avoid any potential title issues when it comes time for them to sell. Title problems can impact how long it takes to close a house severely if the issue is substantial.
The Home Inspection Report
The buyer will want a home inspection to ensure the property doesn’t have any major issues. The home inspector will assess the home to ensure that 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.
Major 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 or even their offer price.
These negotiations can slow down the progress to closing, but there could be a bigger 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 repairs 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 needs to be done quickly.
To prevent this potential delay from slowing things down, the seller can pay for a pre-inspection. While this will be an extra expense for the seller, it will reveal problems with the home they probably didn’t know about.
How long it takes to close after the inspection is done will really 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 closing time frame.
Appraisal Issues Can Potentially Delay The Time it Takes to Close
The home appraisal can be another stumbling block in the 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 get affected if the issue is not resolved in a timely fashion.
If the home is valued for less money than the buyer has offered, a few things can happen. It may mean that the buyer wants to renegotiate their offer price if they have no way of making up the difference in values.
If the buyer has additional down payment funds, this could satisfy the lender in moving forward. Sometimes a compromise is a combination of both happening.
The seller will come down in price a bit, and the buyer will put more money down.
There is an option to challenge the low appraisal carried out on the home, but this is unlikely to be successful unless the appraiser has made mistakes.
The only likely consequence of this 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 Tweet
How long does it take to close after the appraisal is done? It really depends on how quickly the lender orders the appraisal and the appraiser visits the home. The time to close could take only a few weeks after the appraisal is completed.
Buyer’s Current Home Sale Getting Delayed May Impact Closing Time
Another potential problem that could cause a closing 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 it gets delayed for whatever reason, it will impact the closing of the second home in line.
Tips to Help Avoid Closing Delays
With all the separate parts involved in the closing process, there are only a few things within your control to ensure delays are kept to a minimum.
As the home seller, you should only deal with buyers who have been preapproved for a loan. It should make the buyer’s financing easier and faster during closing.
If the buyer wants repairs made that were highlighted in the home inspection, make sure you don’t delay hiring someone to deal with the issue.
Don’t take too long over your decisions. When you enter into negotiations with the buyer, it can be all too easy to take your time over difficult decisions and concessions.
To keep the closing date set out in the purchase contract, you should act decisively in your decision-making.
Cash and No Contingencies is King For Speeding Up a Closing
If you are wondering how long it takes to close on a house when a buyer is paying cash, it’s much quicker!
Paying cash will really speed things along quickly given there is no mortgage in the home closing process.
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 having to deal with a buyer that needs loan approval. Not having to wait for mortgage approval can shave off significant time for a closing to take place.
In fact, you might be able to close in as quickly as a week when it is a cash transaction. You might be sitting at a closing table much quicker than you ever thought possible.
So, if you were wondering how fast you can close on a house, you may not have realized it can be done in a matter of weeks with a cash sale.
Cash buyers eliminate many of the problems that can crop up in a real estate transaction. There is no waiting on a bank 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 a completely different animal.
The time it takes from offer to closing on a new home really depends on a few factors. Has the home 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 larger, more 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 closing 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 kind of property will also have a shorter time frame to build and closing time.
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 house is in the same condition as when the offer to purchase was made. It is the final step before heading to closing.
If there are issues discovered, this could potentially impact the scheduled closing time.
If issues are discovered, sometimes the closing 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 Happens on Closing Day
If you have navigated your way past all the previous issues successfully, you just have the last step; closing day.
A closing appointment will be made between the buyer’s lender, the seller, and either a title company or attorneys representing the parties.
There will be a closing agent or attorney assigned to review all of the paperwork a buyer will be signing.
The closing will typically take place at the office of the attorney representing the lender or the title company unless otherwise agreed. The actual closing takes place rather quickly.
The final closing process should be over in under 2-hours and involves important documents in the house sale. This will include the property deed, the mortgage, the note, the bill of sale, and documents relating to the closing disclosure.
Buyers will be required to bring a cashier’s check to the closing to make up the difference between their home loan and purchase price. A cashier’s check or bank check is needed to ensure the funds are good. The closing agent will collect these funds.
Typically, the buyer will need to attend the closing to sign the documents, whereas the seller can sign their paperwork in advance.
Once all the important documents have been signed, closing is over, and the paperwork will be recorded at the local registry of deeds. At this point, the house is considered sold.
So the closing itself only takes a short time to complete. Many home closings last under an hour and some are as quick as 15 minutes to complete. For most folks the actual closing day is painless and a time to celebrate.
Moving into your dream home will now be a reality.
Documents to Be Signed at Closing
At the closing table, a buyer will be expected to sign numerous documents while the seller will have very few.
As a buyer, you should expect to sign the following closing documents:
- The promissory note: as you might expect, the promissory note is your agreement to pay the mortgage loan back in full. It also provides the mortgage terms of your loan.
- The mortgage note: the mortgage note details the terms of the mortgage, such as the amount your borrowing and how much money you’re putting down.
- The escrow disclosure: 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 foreclosure on the property if you don’t make mortgage payments or violate the other loan terms.
If you need to quickly get through the closing process, you can follow our tips to make sure you don’t add to the time from offer to closing. Understanding how long it takes to close on a house from the time of the offer to attending a closing is essential when you haven’t bought a home before or haven’t sold in a long time.
Hopefully, you have enjoyed our guide on the length of time it takes to close on a house.
About the author: The above Real Estate information on how long does it take to close on a home was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at email@example.com or by phone at 508-625-0191. Bill has helped people move in and out of many Metrowest towns for the last 34+ years.
Are you thinking of selling your home? I have a passion for Real Estate and love to share my marketing expertise!
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