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On average, it takes around 30 to 60 days to close on a house from the time you submit your offer to the day you get the keys to your new home. Why does closing take so long? Various closing factors will determine the wait for the keys. This article covers the average close time on a house.
How Long Does It Take to Close on a Home?
Let’s talk about expectations for a fast mortgage. Loan type is the first factor that determines how fast you can close on a home.
Overall, it takes between 30 and 60 days to close with a mortgage.
A conventional mortgage is the speediest mortgage type. This is a loan that isn’t backed by the government. It also requires a credit score of at least 620 for most borrowers. Closing with a conventional mortgage takes an average of 48 days.
When going for a Federal Housing Administration (FHA) loan that’s backed by the government, borrowers will need to be a little more patient because the average time to close is 54 days. However, the minimum credit score of 500 and potential down payment as low as 3.5% can make that wait more than worth it for some borrowers.
Borrowers qualifying for a U.S. Department of Veterans Affairs (VA) home loan will need to go through a complex underwriting process that extends the time to close to an average of 57 days. Of course, the low rates and down-payment waiver are the rewards for patience.
The Typical Closing on a House Timeline
While no two closing processes are 100% identical, this blueprint shows you what to expect:
- The Offer: Submitting your offer on a home officially starts the closing process. While there may be some back-and-forth negotiation, an offer acceptance gives you the green light to move forward with financing and inspections.
- Setting the Closing Date: The buyer and seller settle on a closing date during negotiations. The date is added to the purchase agreement contract.
- Mortgage Application: Complete the mortgage application thoroughly and completely to get approved for financing. This should mostly be a “refresher” step if you’ve already gone through the preapproval process.
- Disclosure: Within the first week of an offer being accepted, your lender will provide you with the terms of your loan. This informs you of interest rate, fees, closings costs, and estimated monthly mortgage payments.
- Documentation: Expect your lender to reach out during the first week to request any additional financial documentation needed to move the loan application forward.
- Appraisal: Your lender will order an appraisal within the first or second week of an offer being accepted. The appraisal determines the home’s value to verify that you’re not agreeing to an overinflated sale price that would make the home unfinanceable.
- Inspection: If you haven’t waived your right to a home inspection, book one within the first week of getting your offering accepted. Most contracts only allow an inspection window lasting seven to 10 days.
- Underwriting: In the early stages of loan approval, underwriting is used to evaluate and verify your financial information. Expect the mortgage company to take a deep look at your income, assets, credit history, and debt. You may be asked for additional documentation or verification at this point.
- Odds and Ends: The buyer will need to open an escrow account to submit the down payment, pay title fees, obtain homeowner insurance, and schedule a final walkthrough following offer acceptance.
- Cleared to Close: Your mortgage company is required by law to provide a “cleared to close” document offering a final disclosure of terms. Borrowers have a three-day waiting period for signing and returning the document. Your real estate lawyer should look over the document on your behalf.
- Closing: Once your closing documents are signed, a final review process will happen before your mortgage is officially recorded.
Under ordinary circumstances, your mortgage rate is determined by whatever the rate happens to be on your closing date. That’s because mortgage rates can vary daily. If you choose, your lender will provide you with a rate lock that guarantees that your interest rate won’t change between the offer and closing if you close within a specific time frame without any application changes. Available for 30, 45, or 60 days, rate locks often come with fees. You can also lose your locked-in rate if you fail to close on time.
Reasons Why Closing on a Home Could Take Longer
While most buyers close on time, there’s no end to the list of reasons why the closing process might be delayed. Changes to a buyer’s creditworthiness are usually responsible for delays. This can happen because you’ve:
- Switched jobs after having your home offer accepted
- Purchased a new car using an auto loan
- Used credit cards to cover a large emergency expense
- Applied for a new line of credit for any reason
In some cases, a preapproval that was slightly higher than the actual mortgage approval can throw a wrench in closing plans. The bottom line is that any snag in your financing is likely to delay closing. Next, look at some other common causes of closing delays.
Problems With the Property
Issues uncovered during the home inspection could also delay closing. If a home has more problems than expected, you may need to renegotiate the price or settle repairs with the seller. What’s more, you may discover that a home is not insurable in its current state. Your lender will not finance the home purchase if a home cannot be insured.
It’s wise to have an inspection contingency in place allowing you to walk away with your earnest money if the inspection uncovers foundational damage, structural damage, mold, radon, or a termite infestation.
Appraisal Gap
The home appraisal can also become something of a black hole in the closing process. If a home’s appraisal comes in lower than the offer price, your mortgage lender will not allow the sale to go through. This leaves the buyer in a position to walk away, cover the appraisal gap with cash, or renegotiate the price with the seller. It’s critical to have an appraisal clause in a purchase agreement for this reason!
Title Issues
If the title search shows that there’s a lien or claim on the property, this needs to be resolved before moving forward. Your mortgage company won’t finance the purchase due to the risk that a third party will make a future claim on the home.
Shortage of Professionals in the Area
Closing could also be delayed if local appraisers and inspectors are simply too booked to provide prompt service.
Cold Feet
Yes, it happens. Contingencies are only there to protect you in the event that something comes to light that’s worthy of stopping the closing process. Nobody can physically “force” a buyer or seller to move forward. One of the parties may decide that abandoning the plan is worth facing penalties and legal action.
For the buyer, getting cold feet over an issue that’s not covered by a contingency clause means forfeiting the earnest money deposit. If the seller backs out for a reason not covered by a contingency clause, the buyer has the legal right to seek damages.
The Fastest Way to Close on a House
Can you close on a house in 2 weeks? Generally, this is only possible for a cash buyer. In fact, paying cash for a home is the “hack” for getting the fastest closing on a house. If you’re using financing you’ll still have plenty of ways to shorten the average close time on a house.
The default way to speed up closing is to provide everything your lender requests as quickly as possible. Answer emails and phone calls from your lender, lawyer, and real estate agent as promptly as possible from the moment an offer is accepted. Other tips for getting a fast mortgage include:
- Choosing an experienced, highly rated real estate agent.
- Applying for a mortgage loan through the same lender you used for preapproval
- Being 100% honest about all financial information
- Avoiding any changes to your finances between offer acceptance and closing
- Limiting seller concessions
While some people recommend waiving the inspection to close faster, this creates a big risk. What you can gain in time can be lost in actual dollars when you discover costly and time-consuming problems down the road.
What If Closing Doesn’t Happen on Time?
Both parties can agree to amend the original purchase contract with an extended deadline.
If the reason for the closing delay falls on the buyer’s end, the seller may be able to cancel the transaction. This is more likely to happen if the seller has backup offers. The seller could also attempt to charge the buyer a per-diem rate for every day past closing to cover property taxes, mortgage payments, insurance payments, and the inconvenience of the delay. The seller could even seize the earnest money deposit.
If the seller is at fault, the buyer may be able to cancel the transaction while keeping their earnest money deposit. They may also sue the seller for damages.
