Buying a home can be a stressful experience even if you’ve done it before. New homebuyers are often caught off guard by the underwriting and approval process, extending their closing by days or even weeks. Homebuyers often wonder how long it takes to close on a house without taking the time to learn the specifics. Find those specifics below along with tips that help expedite your closing.
What is the Purpose of Closing on a Mortgage?
The closing appointment for a mortgage is a single appointment wherein everything related to the mortgage is brought to the table and finalized. You cannot spread out a closing over several appointments because it can be difficult to get everyone in the room at the same time.
Who Attends a Mortgage Closing?
Generally, participants in a closing include:
- Buyer or buyer’s representative
- Sellers or seller’s representative
- Real estate agents for both sides
- Closing attorney
What Happens at Closing?
We giggle in popular media about “signing away your life” when you close on a mortgage, but that is not entirely true. You are verifying that you agree to pay the contracted price, follow the amortization schedule and insure the home.
Closing documents will include your home insurance, the inspection report and evidence of a clean title with no liens. You have to sign off on everything so that it is clear — under the law — that you know what you are getting into. Moreover, the government asks that you follow certain procedures to protect both buyers and sellers.
The closing attorney has legal knowledge of every document, can explain it to you and knows where you should sign. Funds are dispersed to the seller, their mortgage company where applicable and the real estate brokers.
You walk away with a package of documents explaining everything about the sale. Plus, this is your opportunity to thank the seller or buyer one last time, hand over the keys to the house and forward documents to other parties as needed.
The title company files the new deed and mortgage paperwork with the municipality — so it knows you own the house — and you can move in.
Why Does it Take so Long to Close on a House?
There are several reasons it can take quite a while to close on a house. Some are issues you must resolve, others involve the lender and still more involve money attached to the deal.
First, the lender and its mortgage processing team can take time to underwrite and approve your application. You may submit several documents only to be asked for more as time goes on. The underwriting team may not approve you to close until a few days prior to your scheduled meeting, but you must proceed as normal.
Remember, you may be asked to submit:
- Tax documents
- Gift letters pertaining to extraneous financial contributions
- Letters explaining negative credit items
You may request a 30-day close to compile documents if you have already saved for the down payment. If you need more time to save, request a 60- or 90-day close. The seller must agree to wait for you to close, but this is often a simple ask that sellers agree to when they know you have financing
What if you pay Cash?
You can expedite any closing by paying for the house in cash. Of course, the majority of Americans cannot do this, but anyone can close as soon as the documents are drawn up. Commonly, house flippers, real estate investors or the wealthy pay in cash so they can move on with the transaction and avoid mortgage lenders.
Not only should you not make any major purchases, you also should alert your loan officer if you are confronted with a situation that could impact your credit. Ask your loan officer when they will stop checking your credit and whether there is a closing date that prevents them from reassessing the loan.
Inspection and Appraisal
The lender needs an appraisal because it cannot loan you more than the house is worth. You need an inspection to uncover issues with the home that need to be resolved or would cause you to walk away from the contract. If you wait too long, it may be difficult to back out on a lemon, get the issues resolved or close on your desired date.
How to Avoid a Protracted Closing
While the standard closing lasts somewhere between 30 and 90 days, there are steps you can take to avoid delays and ensure that you close on time. You must take into account the mortgage underwriting process, federal guidelines, the seller’s needs and your own responsibilities.
Save for your down payment early, or consider a U.S. Department of Agriculture (USDA) loan when you live in a rural area as these loans do not require a down payment.
Shop for homes when you effectively have the down payment in your hip pocket. If you need too much time to close, sellers will often deny the request.
Ask the seller to cover your closing costs, ensuring that you don’t need to save even more money.
Submit all paperwork in a timely fashion.
Follow up with your mortgage broker or loan officer constantly. The writer has lost a house only a few days before closing because of poor follow-through on the mortgage broker’s part — issues that could have been avoided with consistent detailed communication. If at any time you believe your mortgage broker is not doing their due diligence, reach out to their superiors.
Hire a real estate agent who does this sort of thing every day and can share tips with you. Plus, agents often have preferred mortgage lenders that they know will do a good job. They also help resolve issues with the inspection, schedule the closing date and support you during the appointment.
Benzinga’s Best Mortgage Lenders
Because shopping for a home can be a daunting task, you deserve to work with mortgage lenders that make the process simple. Benzinga curates a massive list of lenders, often including comprehensive reviews. Use this list of lenders to make the best choice for your family.
Make Closing on a Mortgage Less Stressful
Given all the tips found above, you have the information needed to make buying a home simpler and less stressful. Review these tips with your mortgage broker, follow up with the broker often and ask your realtor for guidance as needed. As always, feel free to return to Benzinga for an array of financial information you cannot get anywhere else.
Frequently Asked Questions
What is the fastest way to close on a house?
Pay cash. While this is unrealistic for most, paying cash is the fastest way to close on a house. If you have a conventional loan with a 20% down payment, you can shorten the closing process by avoiding federal guidelines attached to Veterans Affairs, Federal Housing Administration and USDA loans.
Why does closing on a house take so long?
Closing on a house takes time because there are so many moving parts. While you are not in control of all those moving parts, ensure that you do your due diligence, respond quickly to your lender and remain in constant contact with your loan officer.
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