Buying a home is one of the biggest foundational pillars of the American Dream. Unfortunately, it can sometimes feel like a long and tedious process. One of the aspects people dislike the most is the closing process. You could see an entire month or more go by before you finally get to move into your new home. So, how long does it take to close on a house? Zillow estimates anywhere from seven to 45 days.
What Happens During the Closing Process?
Agents check the legitimacy of documentation and ensure accurate transfer of the property title. If you are the buyer, these are the specific documents the lender or your attorney may ask you to review:
- Right-to-cancel form
- Promissory note
- Mortgage documents
- Escrow disclosure
- State-mandated documents
If you are the seller, whether you attend the closing may depend on state laws or your specific circumstances. You may need to sign several documents ahead of time:
- Statement of information
- Statement of closing costs
- Certificate of title
- Loan payoff
- Deed of sale
Who Is Involved in the Closing Process?
When looking for answers on how long does it take to close on a house, you may realize that multiple professionals play roles in the process. The sheer number of involved parties can contribute to your wait time.
One of the main players in the closing process is the title company. These individuals verify the legitimacy of the title. They also provide the following functions:
- Supervising the escrow process
- Working as closing agents
- Issuing insurance
Title insurance agent
The agent does the bulk of the work related to verifying and transferring the title of the property. He or she also researches liens and outstanding mortgages on the property.
The buyer’s agent may assist in preparing the necessary paperwork. He or she may also handle the details of closing and answer pressing questions.
Buyers also have attorneys who work on their behalfs during the closing process. The attorney may fulfill the following functions and more:
- Advising clients on tax implications of acquiring the property
- Reviewing documents for accuracy
- Assisting with the financing process
- Navigating zoning complications
- Ensuring the honoring of warranties
Attorneys can foresee potential setbacks and plan ahead so they are resolved by the time the closing process begins. The seller’s lawyer may also draft and review documents as well as assist with tackling legal issues that may arise.
Prior to closing, real estate agents primarily handle listings, attracting buyers and negotiating on the sellers’ behalfs. During the closing, the agent may now assist with wrapping up some elements of the final agreement, such as repairs and closing statements.
Zillow estimates that almost a quarter of Americans buy their homes in cash. However, most people seek traditional mortgages. Mortgage professionals representing the lender may coordinate with the buyer’s team to ensure the financing process goes smoothly.
When Does It Take Longer To Close on a House?
A number of factors can affect how long it takes to close. The biggest variation comes from whether the person needs a mortgage or plans to buy the home in cash. Zillow reports that cash closings can occur in just a week, while mortgage closings can last for anywhere from 30 to 45 days.
Realtor.com provides additional instances when closing times may last longer than usual:
- Buyers struggle to get mortgage approval.
- Buyer procrastinates on securing homeowner’s insurance.
- Buyers delay closing so they can sell their current home.
- Lenders’ appraisals arrive at lower property values.
Examples of How Long It Takes To Close On a House
Alec has been living frugally so he can save up a large down payment for a house. However, the more he thinks about taking on big debt, the more uncomfortable he feels. Someone recommends tiny homes and after touring one, he’s sold on the idea. He uses his down payment money to buy one in cash from a retired couple. The closing process takes 8 days to complete.
Carol wants to purchase a home and decides to tour a few in her area to get a feel for the options available. After touring her third home, she decides to buy it. However, she was not preapproved for a loan. It takes her two weeks to find a mortgage company willing to fund her first-home mortgage. The closing process takes her 40 days.
Steps for Closing on a House
The buyer and his or her team carry most of the responsibility. They generally need to complete the following steps:
- Open an escrow account.
- Complete title search and insurance.
- Hire a lawyer.
- Negotiate how much to pay for closing and who will pay.
- Complete a home inspection and inspection for pests.
- Renegotiate based on inspection findings.
- Secure the interest rate.
- Do away with contingencies.
- Follow requirements for funding.
- Complete the final walk-through.
Bankrate estimates closing costs at about 2% to 5% of the total price of the property you intend to purchase. You may pay this by wire transfer or cashier’s check.
When the buyer cannot attend the closing, an agent may do so on his or her behalf. This may happen if the buyer lives in another area or becomes ill during the process.
The mortgage application takes the longest, which is why paying by cash speeds up the process. It can take anywhere from five to 20 days. Inspections, repairs and appraisals also take a week to two weeks to complete.
Are you in the market for a new home? Find advice on our blog on how to manage your cash and debt.