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After you've found a home and signed a purchase contract, the process of closing begins. It can take up to two months to close on a home because buyers and sellers have to meet certain obligations leading up to the official closing day.
Here's an overview of what happens during closing and the delays that could derail your timeline.
How long does closing on a house take?
Closing can take anywhere from 30 to 60 days. In May 2022, the average time to close on a house purchased with a mortgage was 48 days. Conventional loans took 47 days to close, and FHA loans took 51 days to close. Closing on refinance loans took 51 days for conventional loans and 52 days for FHA loans. Closing happens faster when you buy a home in cash because you don’t need to get mortgage approval.
How long does closing day take?
On the official day of closing, the buyer and seller will finalize the transaction. The closing day appointment should only last an hour or two, if that. You'll sign the final paperwork and documents, which include the closing disclosure, a deed of a trust, and promissory note. Depending on where you live, either an escrow officer, title agent, or real estate attorney will be there on closing day to guide you.
What happens during closing
Once a home is under contract, there are a few more things that need to be taken care of before the sale is official and you can close on a home. This includes opening an escrow account and getting a home inspection to get a better idea of the home's condition.
If the inspection raises any issues, the buyer and seller will negotiate necessary repairs — including whether the seller fixes the issue or covers them as seller concessions, which are a credit toward the buyer’s closing costs.
At the same time, the buyer needs to complete their mortgage application if they’re getting a home loan, as well as purchase home insurance. The mortgage lender will then order a home appraisal to make sure that the property is worth the purchase price.
The title company, which handles transferring ownership of the house to the you, will conduct a title search and work with your real estate agent to set a closing date.
A few days before closing day, the buyer will do a final walk-through of the home.
Why does closing on a house take longer?
There are a ton of moving parts to the closing on a house. Unsurprisingly, there are also many issues that could pop up along the way and cause closing delays. Here are some of the most likely culprits:
- Financing issues: The mortgages underwriting process may turn up problems, like a dip in the buyer's credit score The lender may re-assess the loan terms or require additional documentation, which may affect when the loan will close.
- Low appraisal: The mortgage lender will not lend a buyer more than the home's appraised value. When this happens, the buyer will either have to renegotiate the purchase price with the seller, pay the remaining balance out of pocket, or walk away from the sale if they have a contingency.
- Inspection flags: The home inspection will flag issues in the house that need repairs, kicking off another round of time-consuming negotiations between the buyer and seller.
- Title problems: In some cases, the title company may find liens, unpaid taxes, or other issues that could potentially affect ownership of the home. Clearing the title can be time-consuming, especially since it can involve jumping through legal hoops.
How to close faster on a home
How quickly you can close on the home depends on market conditions. Here are tips to move up your closing date:
- For buyers: Get pre-approved by your lender before making an offer to help speed up the application process. This step will require preparing your financial documents beforehand. Also be decisive and communicative, especially during negotiations. Otherwise, the back and forth between you and the seller can take up a lot of your time.
- For sellers: Ordering a preliminary title report, or getting an inspection before listing your house could prevent surprises down the road.
- For buyers and sellers: Getting rid of contingencies, like allowing the buyer to back out if they can’t sell their existing home, means there won’t be anything holding up the home sale.
If you're buying a new home and selling your current one at the same time, Orchard can streamline the closing process. We'll help you make a strong, non-contingent offer to buy your next home, then sell your current home for top dollar in 120 days or less. That way, you can eliminate the stress of lining up your closing timelines so you can focus on finding your dream home.