So you’ve gotten pre-approved, found your dream home, and your offer was accepted.
Now it’s just time to wait for closing day..
You may be wondering how long does it take to close on a house?
If you relax too much after your offer is accepted you may end up delaying your closing.
In this article we will take a look at the average time it takes to close and give you some advice to make sure you close on your home in time.
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What is closing day?
The closing day is the final step in the mortgage process when you take ownership of the property. The closing date is set in the real estate contract signed by the buyer and seller, usually 4-8 weeks after the offer is accepted. Closing on a house usually takes place at the title company.
Average time it takes to close on a house
According to Fannie Mae the average closing time for a new purchase is 46 days, and 49 days for a mortgage refinance. This is an increase of 3-4 days from a little over a year ago in 2016. FHA loans take just about the same amount of time 45-46 days on average.
Home closing delays
Delays in closing are due to underwriting requirements. When a loan officer puts your loan file together they have to submit it to a mortgage underwriter. If anything is missing the loan application is kicked back to the loan officer to gather the missing information.
According to Matt Schwartz, branch manager at Southlake Funding, the most common reason for delays in closing is inexperienced loan officers.
In some cases the underwriter will require more documentation. If you are unable to close by the date listed in the real estate contract you will need to ask the seller for more time to close.
Here are some of the most common reasons for delays in closing.
Common reasons for delays in closing on a home
- Unable to trace down payment funds
- Inexperienced loan officers
- Late payments or collection accounts noted on the borrowers credit report
- Debt that needs to be paid off prior to closing
- additional updated bank statements needed
- Delayed final walk through
- Issues found in title search
- Leins or judgements on the property
- Missing documentation
- Incomplete loan application
- Low appraisal
- Agreed upon repairs not completed
How long after appraisal does it take to close?
How to close your mortgage on time
In order to avoid closing delays and to close on your house on time you will need to be responsive, to your lender and real estate agent.
Anytime your lender requests information you should try to produce the required mortgage documents as fast as possible. Being prepared for everything your lender could ask for is one way to stay ahead of the curve.
List of mortgage documents needed to close
- All W2’s from past 2-3 years
- 3-6 months worth of Paycheck stubs
- 3-6 months of Bank Statements
- 2-3 years tax returns (personal and business)
- Down payment gift letter (if using gift funds)
- Letter of timely rental payments from a landlord
- Proof of any secondary or part-time income
- Divorcee decree
- Bankruptcy/short sale/foreclosure paperwork if applicable
- Cashier’s check for up-front costs (closing costs, down payment, etc
- Bank information for wire transfer
Documents needed for the Closing Process
- Earnest money deposit
- Escrow account set-up
- Completed home inspection or waiver of inspection
- Final walk-through
- Deed of trust and executed promissory note
- Fully executed purchase agreement and addendum’s
- Completed home appraisal of property
- Loan approval from the mortgage company
- Buyer’s and seller’s signatures on loan documents
Closing Day Tips
You should take off the day of your closing. Bring all the documents you have to the title company’s office. You will need a check, money order, or cashiers check made payable to the title company, or lender for the down payment and other closing costs you’re paying up-front.
- Take the day off
- Bring all mortgage documents you have
- Take your check book
- Photo ID (Drivers license)
- Proof of Insurance
The Home Inspection
You should always have the house you’re purchasing inspected prior to closing. Make sure you get your home inspection performed as soon as possible. If there are any repairs that you want the seller to address before closing you want to give them ample time to do so.
Getting a pre-approval letter before buying
Before you start searching for a home you should get a pre-approval letter. This is different than a pre-qualification. A pre-qualification means a lender has pulled credit and you qualify based on your provided income and credit, however lenders do not verify income for a pre-qualification.
A pre-approval letter means the lender has pulled credit and verified income with pay-stubs, bank statements, and tax returns.
How long it takes to close on a house depends on a few factors. Some of which are out of your control such as repairs not being performed on the home, or having an inexperienced loan officer.
Make sure you respond to all requests in a timely manner, and that you have all mortgage documents submitted as soon as possible, preferably at the same time you turn in the purchase contract.
The average time it takes to close on a house in 2017 is 46 days. Make sure your Realtor gives you at least a 46-50 day window to be prepared and ready for closing.
Want to make sure you choose the right lender and don’t have any closing delays? Speak to our lenders and get a home loan quote today.
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