Closing on a house can take up to two months. Here’s why.
Real estate transactions are highly regulated. Several authorized parties need to review everything to ensure the process goes smoothly and the transfer of ownership is legitimate. So, exactly how long does it take to close on a house? According to Zillow, the closing process can last from seven days to 60 days. The final numbers depend on how you purchase the house, i.e., whether you needed financing and what option you chose.
Table of contents
- Why Is the Closing Process Important?
- Who Is Involved in the Closing Process?
- When Does the Closing Process Take Longer?
- Examples: How Long Does It Take To Close on a House
- Steps for Closing on a House as Quickly as Possible
- Quick Questions
Why Is the Closing Process Important?
Lenders, real estate agents and attorneys protect themselves and their clients by completing a thorough check of the paperwork related to the property. The closing process ends on closing day when you finally get to sign all the paperwork. This part of the process can take roughly an hour or two to complete. This is what happens on closing day:
- Paperwork: You receive a lot of technical and legal paperwork to sign. An authorized professional walks you through the process.
- Insurance: After finding a home, your agent should advise you to shop for home insurance. You present proof of this insurance on closing day.
- Money Transfer: You transfer money to cover the closing costs and downpayment. Your lender also pays the seller for the property.
- Escrow: Your lender creates an escrow account. This holds some of the additional payments handled by your lender, such as property taxes.
- Ownership: Authorized professionals go through the process of ensuring you sign all the necessary paperwork to transfer legal ownership.
Who Is Involved in the Closing Process?
Several professionals work together to complete the closing process. Bank of America identifies the following professionals as playing crucial roles:
Real Estate Attorney
Some buyers and sellers involve attorneys in the buying process. This is not necessary, but it can provide peace of mind. This legal professional can review all documents and proposals and assist with verifying the title and other paperwork.
Real Estate Agent
Real estate agents for both the seller and buyer serve as representatives of their clients. They liaise with other professionals to provide all necessary paperwork and details.
This professional is usually a title company representative. The closing agent tackles the process of verifying that the seller actually owns the property before attempting to transfer ownership to the buyer.
The notary public may serve as an official witness of the documents signed and the person(s) who signed them. He or she is important to the process as an impartial witness.
During the closing process, lenders review all the information submitted to justify your credit-worthiness. This representative supplies the mortgage paperwork on closing day.
When Does the Closing Process Take Longer?
The closing process can take as little as a week if you purchase the home in cash and there are no discrepancies with the title. Aside from getting a mortgage, these factors can cause the process to drag out.
If you start the mortgage process and then lose your job or an account falls into delinquency, your credit-worthiness could change. This could drastically change the size of the mortgage the lender approves you for.
If the seller has ownership disputes with other parties or there are liens on the property, this can add extra time to the process. In some cases, the seller may need to pursue litigation to resolve these problems.
If the appraiser decides the home is worth less than the seller wants you to pay, the lender could refuse to fund the mortgage. This could lead to renewed negotiations with the seller or needing to come up with more cash.
Examples: How Long Does It Take To Close on a House
When trying to understand how factors might add to your closing time, short examples can help. Consider the following:
- Anna has saved up to buy a small home in the countryside in cash and closes on the home in seven days.
- Brett finances a large home in the city and runs into title issues, which take 45 days to resolve.
- Nick finds a home before becoming pre-approved, so the entire closing process takes him 60 days.
Steps for Closing on a House as Quickly as Possible
Most people do not have the means to buy a home outright in cash. So, if you need a mortgage, consider the following tips to close as soon as possible:
- Get pre-approved before you start hunting for a home.
- Respond quickly to any requests for more documentation.
- Choose a home that requires lower financing than the amount you are pre-approved for.
- Book the inspection for the earliest possible date.
- If the appraiser values the home much lower than the seller’s asking price, know what your backup plan involves.
- Work with experienced professionals with an intimate understanding of the closing process.
The large stack of paperwork mostly falls into three categories. These include the deed of trust or mortgage, the closing disclosure and the promissory note.
Your closing cost ranges from 3% to 5% of the total loan amount. It is possible to negotiate with sellers to pay for closing costs, but they are not obligated to do so.
If you see a different rate on the closing disclosure than you were quoted or the amount is much higher than your loan estimate, don’t sign the document. These discrepancies usually arise from human error and tend to be easy to resolve.
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