Buying or selling a home can be an arduous process, especially if it’s your first time. It takes two or three months on average for a seller to receive an acceptable offer. A homebuyer can expect to spend a month or two shopping for a house. But the transaction doesn’t end when the seller accepts an offer from a buyer.

Once a homeowner accepts a formal offer to buy their home, the closing process begins. The closing process ends when the buyer takes ownership of the home. Usually, the entire closing process takes 30 to 60 days. For example, if a seller accepts an offer to buy a house on May 1, an average buyer can expect to close on the home sometime in June.

However, these numbers are just that—they are averages. Many factors determine how long it takes to close on a house. Problems may come up that slow the process, while there are some things you can do to speed things up.

The Closing Process

Most of the closing process involves the lender doing due diligence before agreeing to finance the transaction. If it’s an all-cash transaction, meaning no financing is required, the closing process becomes significantly shorter. When funding is not needed, the title and escrow companies only need to clear any liens, provide insurance, and prepare the paperwork for the closing. Usually, it takes about two weeks.

The majority of home purchases, however, will need financing with a mortgage. When a lender is involved, you can expect the closing process to take around 45 days. Though the process can vary depending on where you live, the factors that influence the time it takes to close remain the same.

The Loan Application

For most home purchases, the buyer starts the closing process by submitting a mortgage application. The application will include information such as name, Social Security number, estimated income, property address, the estimated value of the property, and the requested loan amount. The application should take less than an hour to complete.

Buyers who want to speed up the closing process can apply for a mortgage preapproval before offering to buy a house. That way, the lender does most of the work before the closing process begins, and they would only have to verify that nothing substantial has changed.

Sometimes the mortgage application is insufficient in some way. Either it is missing information, or it has errors. In these cases, the underwriter may kick it back to the loan officer to fix, which may delay the time it takes to begin processing the loan.

Loan Application Processing

Once the loan application is submitted to the underwriters by the loan officer, the lender can begin processing it. They do that by collecting documentation and verifying income and credit. If the buyer has excellent credit, the lender might be able to breeze through the loan processing. But if they find red flags in the credit report, are unable to trace payment funds, or are missing documentation, the process can take much longer. The time it takes to process a loan application also depends on how efficient the lender is, how busy they are, and the type of loan. Processing the loan application typically takes 7-14 days.

Appraisal

As part of the lender’s due diligence, they will hire a third-party appraiser to determine the value of the home. It usually takes a few days for the appraiser to show up at the property and then another few days for them to deliver the report to the lender. The whole appraisal process should take 7-14 days.

An appraisal might delay the closing process if the appraisal value comes in lower than expected. If that happens, the lender may order a second appraisal to confirm, or they may have to renegotiate and rework the mortgage. The lender may also find a significant issue affecting the value of the home that might cause a delay (such as structural issues or a roof in need of repair).

Title Search

A title company will perform a title search on the property and then issue title insurance to guarantee their findings. During the title search, they will check if there are any judgments, liens, or bankruptcies associated with the property. Any issues they find must be taken care of before the closing can proceed. Although it usually takes 7-14 days to complete the title search and issue insurance, the process happens separate from the lender’s loan processing and can be done while the loan is being processed.

Clearing to Close

Once the lender decides to approve the mortgage application, they check to make sure any contractual contingencies are cleared. Most offers are contingent on the home inspection and allow buyers to walk away or change the contract terms if any significant issues are found during the inspection. If problems cannot be remedied quickly, it may be necessary to delay the closing.

Other contingencies may have to be resolved before closing can take place. A common one is that the buyer may have to sell their old home before closing on a new one. Expiration of mortgage preapproval before the closing may also slow things down because the lender will need to do further credit checks.

If everything checks out and all contingencies are cleared, the lender will issue a “clear to close.” That means they will deliver the Closing Disclosure to the buyer for review.

Closing Time

The buyer has a mandatory three days to review the Closing Disclosure. During this time, they will do a final walkthrough of the home, and the lender will do some last checks to make sure there were no material changes to the mortgage application (such as a change of marital status, employment, or credit). Any problems that come up at this stage in the process will likely cause a delay in closing.

On closing day, the buyer and seller sign all the necessary documents and transfer the monies to complete the transaction. Even during closing day, there is a potential for a few hiccups. Problems may arise if either the buyer or seller cannot make it to the closing, one of them does not have a valid ID, or there are issues collecting the money needed to close the deal.

Most likely, the closing should take only an hour or two. After all, every party present at the closing did their best to ensure it happens smoothly without a hitch.

Sources

1. The Home Closing Process (the balance), by Elizabeth Weintraub
2. How Long Does It Take to Close on a House? (realtor.com), by Margaret Heidenry
3. How Long Does Closing Take, and Do Delays Spell Doom? (HomeLight), by Corinne Rivera
4. How Long Does it Take to Close on a House (The Lenders Network)
5. Mortgage Guide: What’s the Average Time to Close on a House? (ValuePenguin), by Kenny Zhu
6. How long does it take to close on a house? (The Mortgage Reports), by Gina Pogol
7. How Long Does It Take to Buy a House? (SkyFive Properties), by Kaya Wittenburg
8. How Long Does it Take to Close on a House? (SoFi)
9. How Long Should It Take to Close on a House? (LendingTree), by Crissinda Ponder
10. How long does it take to close on a home? (Worth Clark Realty)
11. Closing (real estate) (Wikipedia 11/8/2019)
12. What Is the Average Time to Sell a House? (Zillow)
13. 5 key steps in the mortgage underwriting process (Bankrate), by Jeanne Lee
14. How to Close a Cash Land Transaction In-House (Full DIY Instructions!) (REtipster), by Seth Williams
15. The Home-Selling Process for an All-Cash Deal (Zillow)
16. Can a Home Loan be Denied After “Clear to Close” Status? (NonPrime.com), by JMcHood
17. How Long Should a Title Company Take to Deliver a Title Policy? (SFGate), by Kristen R. Price
18. How Long Does It Take for an Appraisal and Title Search on a Home? (Sapling), by Scott Thompson