Buying a home and waiting to close on it can feel like being a child waiting for Christmas morning. It’s exciting to buy a new home and to imagine how you’ll decorate it, what it will feel like to wake up in it, and the memories you’ll create there. This new adventure feels like a fresh start, so it can leave buyers anxious to move the process along. However, the Closing process doesn’t exactly happen overnight.
Though you can gauge the timeline of your closing around the average time it takes, there are several important variables that determine how long your own experience will be. Mortgage financing, insurance, and negotiations can all stall the process a bit. Estimating how long it will take to close on a house will involve looking into your own buying situation for potential problems and being prepared for situations that can prolong closing.
Average Time To Close on a House
In 2016, a report by Realtor magazine showed that the average closing time was about 50 days. This may seem like an eternity for buyers who already spent hours walking through homes, talking to agents, and opening and closing countless closets to find the right home. However, those 50 days are spent making plans to move, getting through the loan process, and getting the proper inspections and Appraisal.
If your mortgage loan is easily approved, your appraisal has no disparities, and both buyer and Seller don’t have any previous home contingencies, the closing time may go a little faster than average. The best way to ensure your closing goes fast is to be prepared, communicate, and get things done quickly that you have control over.
What Determines How Long It Takes To Close on a Home Purchase
Each step in the home buying process has the possibility of causing a hold up. However, there are things you can do to either avoid a delay, or expedite the problem if there is one.
Financing Issues
Some of the most common delays in closing are financial. Having issues getting approved for a mortgage sufficient to cover the home price can really delay the process. In order to avoid issues related to your finances that can hold up the closing process, be sure to be pre-approved or pre-qualified for your loan. However, pre-approval is a lot better than pre-qualification. Some sellers even require a loan pre-approval, along with an offer, to ensure the loan approval doesn’t hault closing.
About three days before your closing you should receive your closing disclosure which outlines all of your loan and mortgage information. If you spot an error in this document, be sure to have the error fixed. If you catch it quickly, it might not hold up the closing. However, it’s worth it to hold things up if this document has an error.
Appraisal Conflicts
Home appraisal is a standard aspect of closing to ensure that the home is appraised at the sale price or greater. If an appraisal goes as expected, things can run smoothly. However, if there appraisal problems, they can hold up the process. Repairs and price negotiations are just a few of the issues a bad appraisal can create. Buyers, sellers, and lenders can all dispute appraisals. This can impact loan approval as well as price negotiations.
There isn’t much you can do to avoid appraisal issues, but to expedite any problems that do arise, be sure to communicate quickly to complete the next steps as fast as possible. There may be a new appraisal, the seller may lower the price, you may have to cancel your purchase, but you, the seller, and your lender will all communicate on the next course of action.
Property Insurance
Homeowners insurance, though not required by law, is often required if you finance your home with a mortgage. Not having property insurance before you go into closing can slow down the process. By acquiring homeowners insurance quickly, you’ll check that box and move on through the closing paperwork.
Contingencies
Both buyers and sellers may have contingencies involved in a transaction of their property. When a buyer must sell their home to pay for their new home purchase, or the seller must find and purchase a new home before vacating their current home, the closing process can be held up. Other contingencies include inspections, financing, or insurance, which are quite common.
These contingencies are included in the contract and agreed upon or negotiated before buying. If a seller has a contingency in the contract that states a deal be made contingent on successfully buying another house, that can slow down the closing process — especially in a slow market. However, to avoid a slow closing due to these contingencies, you can negotiate for a time frame that works better for you.
Title Issues and Liens
If the seller of the property is underwater and the sale price of the home won’t cover their debts, the seller may not have a clear deed of ownership. Sellers resolving these title or lien issues prior to listing will help to resolve the issues before they slow down the closing process. If these are not settled, the title cannot be cleared in order to transfer ownership. A title company will work to resolve this issue, but if there is one it can be a process to clear. Unfortunately, liens and title issues need to be resolved by the seller. If there is a problem, there’s not much you, as the buyer, can do to move the closing along faster.
Negotiations
Negotiations about contingencies, appraisals, repairs, price, or even furniture and paint colors can hold up closing. If the seller and buyer can’t come to an agreement on their contract about these details, closing isn’t going to happen. In order to move the closing process along, it’s important to communicate and come to an agreement. However, don’t be afraid of letting a home go if the seller isn’t being fair about negotiations that are important to you. Especially negotiations that impact your finances and the worth of the home. If you have questions about keeping yourself safe, discuss the negotiations with your lawyer or real estate agent.
How long your closing will take will have a lot to do with you, your lender, and the seller. In a perfect world, your financials will be approved, your appraisal will go well, and your seller will have their ducks in a row. However, that’s not always the case. In order to move a closing along, stay on top of your paperwork and communicate openly. Know that there are some things beyond your control, but it’s more important to keep yourself safe from financial trouble than it is to close quickly.
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