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 can be stressful for most people because they just don’t know what to expect. I get asked often, "How long does it take to close on my home?"
How Fast can you Close?
When you sign a contract to put an offer on a home, it’s natural to want to close right away. But it's a process and it takes time. Most closings that require financing take about 30-40 days depending on your lender.
The Loan Closing Process
So what takes so long? Here's what happens once your offer is accepted:
Your Realtor should require you to 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.
Work with your Realtor to find a home and write an offer. Once signed, you give the lender the contract along with any other conditions you can satisfy according to your pre-approval letter.
You wire an Earnest Money Deposit. This is where you put money down "in good faith" to prove to the seller that you are serious about buying the property. This tells sellers you’re a serious and qualified buyer and are willing to risk your funds. A neutral third-party (usually the title company) holds the funds until you close, and you typically have 3 business days to get the money sent.
Your 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. In Florida, you will also need to order a survey if the current only cannot supply a current one. And if this is a VA loan, your lender will also have to order a VA Appraisal in addition to the inspection.
Your Realtor orders Inspections. As soon as the offer is accepted, you will have a short period of time to do your due diligence and make sure the house doesn't require any major repairs (usually 5-10 days). Your realtor will order an inspection, as well as a WDO (wood destroying insect) inspection. The buyer must pay for these inspections, but they are the only assurance you have that the house is in good condition. Your lender will also ask you to secure homeowners insurance on the home. Your Realtor can recommend some insurance providers for you in that area.
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 your 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. A good loan officer and title company are integral in working together and keeping your closing on schedule.
How quickly you close on 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.
If you need more information on how to get started buying a house, please give me a call or text. I work with great loan officers and title companies that will keep us on track and I am very happy to walk you through the process step-by-step.
Comments