How Long Does It Take to Close on a Home?
Buying a house is exciting, but it can feel like it takes forever to get from the offer to the closing table. It takes time to secure financing unless you’re paying cash. Also, it takes time to find your dream home.
On average, it takes 30 – 45 days to get to the closing table, and that’s in a perfect situation. Sometimes you may close faster or slower, but keep 30 – 45 days in mind when signing a purchase contract. When you sign a purchase contract, it’s natural to want to close right away. But it takes time.
You might wonder what takes so long to close on a home. It helps to understand the steps when working with financing your new home.
1. You get pre-approved before you look at homes. This allows the mortgage lender to review your credit score, income, assets, and liabilities. They use this information to make sure you qualify for any of their loan programs.
2. You work with a reputable real estate agent to find your dream home and sign a purchase contract. Once signed, you give the lender the contract along with any other conditions you can satisfy according to your pre-approval letter.
3. You go into escrow. This is where you put money down in ‘good faith.’ This tells sellers you’re a serious and qualified buyer and are willing to risk your funds. A neutral third-party escrow company holds the funds until you close.
4. The lender orders an appraisal and title work on the property title history. This information tells the lender if the home is a good risk. Is it worth at least as much as you’re paying? Is the title clear? In other words, is the chain of ownership legal and are there any outstanding liens aside from the seller’s current mortgage? This process could take a couple of weeks.
5. Clear any outstanding conditions. At this point, to get to a clear to close, you must provide any straggling documentation the lender needs. Sometimes other issues come up when they review your paystubs, verify your employment, or look at your asset statements. Stay in touch with your loan officer and provide documentation as quickly as possible.
6. Close on your loan. Once you have the ‘clear to close,’ you will sign your loan documents before a notary and your lender funds your loan. Then your home goes on record with you as the new owner and you take ownership of your home.