Buying a house is exciting and overwhelming all at the same time. Not only must you find your
dream home, but you must secure financing too unless you’re paying cash.
The financing part causes a lot of stress for most people because they don’t know what to
expect. One of the largest concerns I hear about is how long does it take to close on a home?
How Fast can you Close?
When you sign a purchase contract, it’s natural to want to close right away. But it takes time.
While it varies by lender, the national average is 48 days. With higher interest rates and a slow
in the industry overall, you might see faster turnaround times, though.
The Loan Closing Process
You might wonder what takes so long to close on a home. It helps to understand the steps
lenders go through.
- You get pre-approved before you look at homes. This allows the 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. - 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. - You open 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. - The lender orders an appraisal and title work on the property. 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. - 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. - Close on your loan. Once you have the ‘clear to close,’ you’re free to close on the loan
and take ownership of the home.
Final thoughts It’s always worth asking a lender what their turnaround time is, especially in today’s market.
Some lenders are moving much faster than others. If you have a closing date that’s sooner than
30 – 45 days, make sure you find a lender that can work within that timeline.
Some of how fast you close a loan depends on how well you cooperate with the lender. The
faster you provide the documentation they require, the faster they can clear your loan to close.