How Long Does It Take to Close on a Home? A Week-by-Week Guide
Cash transactions can close in as little as a week or two. However, if there is a condo application process, title issues or other due diligence, it could take longer. How long does it take to close? Assuming your offer was accepted, and you’re getting a loan, the entire process could take as little as 30 to 45 days. For the first two days, it seems like a lot is happening, and then not a lot happens for a while. That’s because your appraisal, insurance quote, title search, condo review, loan file are all happening at the same time.
Before an offer: get preapproved
Get preapproved before touring homes. The lender will go over your income, debts, credit and assets and request certain documents. This will give you an idea of what you can borrow. Get a sense of your budget so you don’t fall in love with a home you can’t afford. And when you make an offer, sellers will take you more seriously because you’ve taken the steps to get financing in order.
Think beyond the purchase price. What are your costs going to be? Consider property taxes, homeowners association dues and maintenance. In Florida, find out if the home is in a flood zone and get a sense of what your insurance could cost. And don’t forget about cash needed at closing. Know what you want. Make two lists, one for must-haves and one for nice-to-haves. Unless you’re rolling in it, odds are you’re not going to get everything on those lists.
Being clear on what you need and what you want will help you make an informed offer. I’ve worked with plenty of buyers who jump in without being prepared. If you can get ahead of the game, do it. Not only will it help you move quickly when you find the right home, you’ll reduce some of the stress. It will also set you apart when you attend an open house, sellers will see that you’re serious and that you have financing in order.
And you’ll save everyone some time by not wasting it on homes that are out of your price range.
Days 1 to 3: the contract starts several clocks
You need to send the contract to the lender and to your title or closing agent. Once you do that, they’ll be opening up their file and you can kick off any inspections or other parts of the process your contract calls for (such as condo association paperwork, and if you’re buying a condo, you should request condo application as soon as you’re under contract.). Your offer just got accepted, and now what?
Keep track of important dates and deadlines (especially the due date for your deposit and the instructions for making that deposit). Make a folder (real or digital, and I vote digital) and keep everything related to your contract in that one place (contract, inspection addendum, requests from your lender, correspondence with your insurance agent, association paperwork, phone numbers to call to confirm wiring instructions). Stay on top of emails and phone calls from your agents, lender, and insurance agent (especially since you don’t want your underwriter to ask you for that one missing page of bank statements that is buried in a text thread with your sister.).
It doesn’t need to be complicated, so just keep it simple so that everyone’s on the same page and the process keeps moving forward without confusion.
The first week: inspection and insurance
Once your offer is accepted, you will most likely have an inspection period during which you can have a professional go through the property and report on its condition. Based on the findings from the inspection, and depending on the terms of your contract and its deadlines, you may be able to ask for repairs or a credit, accept the property in its current condition, renegotiate the terms of your contract, or walk away from the sale.
Insurance can also be an important item to address during this initial period after contract. Your insurer may ask for details about the roof, electrical, plumbing, and HVAC systems in the home. This could require you to get a four-point inspection done. If you get a wind mitigation report, this can show things like whether the openings are protected and how the roof is connected to the wall, and you can get discounts if it meets certain criteria.
Don’t get confused by all the different types of inspections, just be sure that you get your insurance in order and don’t wait until the last week to try to address it, because your lender will not wait. This can seem like a lot, but it’s just a list of items. Check your dates in your contract and tackle one item at a time: Call your inspector right away Call your insurance agent and ask what information or documents they need Keep track of everything and get receipts Reach out to your loan officer with any questions This part of the process can seem daunting, but it’s simply a way to gather information and protect yourself (and the bank.) so you know exactly what you’re getting into.
Just be sure to take care of it all before the clock runs out.
If it is a condo, start the application now
When purchasing a condo, it’s important to review all association documents to ensure you’re aware of the rules. For example, rental restrictions can differ from one building to the next. What’s allowed in one condo might not be in another.
If your condo sale is contingent on approval from the condo association, submit your application and supporting documents right away. In some cases, the process can take weeks. If your packet is incomplete, it could be put on the back burner. Don’t assume that because you’re buying with cash, you can ignore the condo association’s timeline.
Many South Florida condo associations require the buyer to apply to purchase a unit in their building. Depending on the association, this might include a background check, a fee, some supporting documents and, in some cases, an interview with the condo board.
Your lender might also have to approve the building before they’ll approve your loan. They could raise objections to the amount of reserves in place, insurance, litigation, major repairs or special assessments. I’ve seen qualified buyers unable to get financing because of their building.
I realize that when you’re excited about your new place, it can be easy to overlook the fine print. But to avoid surprises, read through all of the condo documents before your closing. Familiarize yourself with the amount of reserves and assessments, as well as rental and pet restrictions.
Your real estate agent can help you figure out which forms you’ll need. Start as soon as you’re able so you don’t run into any avoidable delays that could affect your move-in date. Condo boards work on their own timelines, so be patient, but also be proactive, and get your paperwork in as soon as possible to get ahead of the game.
A condo delay buyers do not expect: I recently worked with a first-time condo buyer online who went through the inspection, title search and appraisal process, only to have her closing delayed for the third time because of an issue found during underwriting with the association’s master insurance policy. Her lease was set to expire, so it’s very possible that the association could end up calling an emergency meeting before her loan can move forward. When I tell clients that I’m done it doesn’t mean that the condo review process is finished. It just takes a bit of time to get through all of the final steps.
Week 2: appraisal and title
An appraisal is different than an inspection. An inspection determines the condition of the house. An appraisal is an independent opinion of value ordered by the lender. An appraisal that comes in below contract price could be problematic. Your loan is based on the appraised value so there may be a gap between contract price and appraised value. Options at this point include the seller reducing the contract price, you coming up with additional cash to close, splitting the difference with the seller, challenging the appraisal (if you have grounds to do so), or canceling (if you have an appraisal contingency in your contract).
I would not recommend waiving your appraisal contingency just to be competitive on your offer. You need to know exactly how much of a cash shortfall you would be at risk for and be ok with that scenario before waiving your appraisal contingency. Just because you won the bidding war doesn’t mean you can still buy the house the next morning if your loan doesn’t pencil.
During week 2 your title agent will order and review the title report to make sure ownership is vested properly and that there are no liens or other issues that need to be addressed or cleared off title before we can close escrow. This process generally goes by unnoticed unless your title agent comes back to you with a payoff or release or association item that they need help clearing.
Weeks 3 to 4: underwriting goes through everything
Your loan will be thoroughly reviewed by your lender during underwriting. They will check your income, assets, credit score, appraisal, contract, and more. This is when you may get a second list of things your lender needs to see, like an updated pay stub (pay stubs have expiration dates.), more bank statements, a letter of explanation for a deposit. Don’t panic, this is a normal part of the process.
During this process, your lender may also re-check your credit or employment, so it’s important that you don’t make any major financial decisions or life changes during this time. Don’t buy a car or furniture on credit, apply for a new credit card, transfer a lot of money into your accounts, or make any changes to your employment situation without speaking to your lender first.
Your job right now is to be boring. It’s been bumpy so far, but this is the home stretch. During this stage, your loan could be put back through underwriting or even denied if you acquire new debt, so be sure to avoid any unnecessary purchases (yes, even the couch you’ve been eyeing, and you can always buy it two weeks from now.). Underwriting can seem stressful, but just breathe and focus on sending your lender the information they need.
What the quiet period can feel like: A buyer recently let me know that her house had gone through the inspection and appraisal. Then, radio silence and crickets, Until, of course, the last few days before clear to close when the requests come flooding in.
There is a waiting game that sellers play in our state. There are long stretches where it seems like nothing is happening. Those periods are followed by a short deadline to produce one more document.
Conditional approval is not the finish line
You may receive a call from your loan officer telling you that your loan has been conditionally approved. This means that once certain conditions (updated documents, proof of funds, insurance binder, title item, appraisal correction, condo approval) are met your loan file will move forward. Please provide all requested items at one time. Don’t send things in one page at a time. This will help things move along smoothly for everyone involved.
Another common phrase is “clear to close.” This means that your loan has been approved for the next step by Underwriting. There are still items that need to be taken care of so please don’t hang up the phone and breathe a sigh of relief thinking that you are in the clear. There are still several items to take care of including making sure you are aware of all details pertaining to your settlement statement.
I’ve known people to relax at this point only to realize that they’ve overlooked a small item which can potentially cause delays for everyone involved. Please remember that your loan closing is a team effort. By staying on top of the process and promptly providing accurate answers and requested items will give you the best opportunity to have a smooth closing process. Patience is a virtue.
Do not schedule your whole move around a target date: On June 3, another buyer applied for underwriting. Her closing date was June 9. But her loan got backed up at the lender and her closing date was pushed. Fortunately for her, her mover allows refundable reservations, and she had a backup housing plan. Having a contract date is important, but it’s also important to have refundable reservations and a housing plan just in case the lender pushes the closing date, so it’s not a last minute panic.
Three business days before signing: read the Closing Disclosure
The last document you’ll receive from your lender is called the Closing Disclosure. This document outlines the final terms of your loan, your projected mortgage payment, estimated closing costs, and the Cash to Close figure. It is required by federal rules for most mortgages that you receive this document at least three business days before you close your transaction. Your Closing Disclosure is similar to the Loan Estimate that you received earlier in the process.
You should compare it to your most recent Loan Estimate to see if there are any changes to your loan product, interest rate, loan payment, lender credits, estimated taxes, insurance, closing costs, or Cash to Close amount. Three things can happen that will cause your three day timeline to restart: – Your APR increases above the tolerance – Your loan product changes – A prepayment penalty is added Other changes that may have occurred since you received your Loan Estimate should not cause your three day timeline to restart.
If any changes have occurred you should ask your lender to explain them to you. Take time to sit down and read your Closing Disclosure. It’s important that you have a solid understanding of this document before you sign. Call me with questions and I’ll be happy to go over it with you. Don’t wait until you’re in the parking lot on your way to sign to pull this document out of the bag.
Closing day: signatures, funds, recording, keys
You’ve worked hard to get to this point. Congratulations. You’re about to sign a bunch of documents at an attorney’s office, a title company or with a mobile notary.
First you’ll sign the note and mortgage, disclosures. Then the Seller will sign the deed. You’ll probably wire your Cash to Close amount. Make sure you call and verify the instructions to wire using a number you already have on file (don’t use the number provided in the email.). Wire fraud is real and sophisticated. Just because an email looks legit doesn’t mean it is.
After the documents are signed and funded, the deed will be sent off to be recorded at the county level. It’s at this point that ownership is officially transferred. Once that’s taken care of, you’ll get your keys. This can happen later that day or possibly the next day (depending on the timing of closing, recording procedures, etc). Stay in contact with your agent and title person and they’ll let you know.
In my forty years here in Florida, I’ve seen this many times. It looks like a lot of documents but it’s really just the culmination of a month’s worth of work. Breathe it in, sign on the dotted line and you’re all set.
The fraudulent email may look completely normal: In all, I’ve been in this business for forty years and have seen just about everything. Here’s a timely cautionary tale.
A buyer was to close the next day and received an email from the person at his title company advising him of a problem with a late wire that could jeopardize closing. The email looked legitimate. There were no spelling errors, the sender’s name was right on. There was a sense of urgency, of course. Luckily, the buyer sensed something was off and called his title company using a phone number he independently researched. If he had not done so, disaster could have occurred.
When it comes to closing, time can seem both speedy and slow at the same time. But when receiving an email, no matter how pressing the need to reply may seem, remember this: before wiring money, call using a phone number you independently researched.
What usually pushes the date back
Have you ever experienced delays in the closing process? There are a lot of moving parts, and they don’t always move in unison. Here are some reasons you may see delays in your closing date: Appraisal came in lower than contract price Back to negotiating table Issues obtaining condo packet Issues with condo association Board meetings held on certain day each month Issues with building from Lender Condo association costs are too high Issues obtaining insurance Insurance is too expensive Missing information Lender or Underwriter needs more information Issues with Title Existing lien Buyer incurred debt accidentally Missed deadline There are some things you can do to prevent delays, such as: Making sure your information is accurate and complete Responding quickly to requests for information Order condo packet and work on insurance early Keep your finances stable Know the deadlines in your contract Unfortunately, not everything is within your control.
What can you do when it feels like everything has come to a standstill? First, take a deep breath. There will probably be times during your closing process where nothing seems to be happening. It’s totally normal. Don’t panic if you don’t hear from your lender for a day. Second, know what’s outstanding. Find out what the issue is, and who is responsible for taking care of it.
If it’s not something you’re responsible for, try and focus on something else while that’s being worked out. Finally, stay on top of things, but don’t be a nag. Check in, but not too frequently. After forty years in this business, I can tell you that the process usually works itself out, and you just have to wait for all the pieces to fall into place.
If you are earlier in the process, start with what the home buying process really looks like, the documents to prepare before applying for a loan, five questions before making an offer and who pays for what at closing. The CFPB also has a plain overview of what to expect at a mortgage closing.
