The process of buying a house is not a fast one and you may be wondering how long does it really take to close a deal. The seller must first accept the offer, and after that, if you’re applying for a mortgage, you can expect to close and own the property within 60 days at most.
Sometimes, delays can happen for unexpected reasons, so the process would take longer as well. Technically, there are various closing periods, with the shortest at 15 days. In a 2019 report, Realtor.com finds that closing a deal normally lasts up to 45 days after contract signing.
Steps in Closing On A House Sale
First time home buyers may be surprised that a few other people are involved when closing on a house. That means that the decision and processes do not only lie with the seller. Knowing the steps and processes that are involved will give you an advantage because you can prepare things ahead to facilitate a smooth transaction. Sorting out the details and preparing the necessary documents will expedite the whole process, especially when dealing with the proper authorities.
- Purchase contract signing. The buyer and the seller must first agree on the purchase price. There are also instances that the seller refuses to pay closing costs if the buyer requests. Both parties must come to a compromise to make things faster. After settling an agreement, it signals the closing process.
- Cash deposit. The buyer must submit an earnest deposit for the house that must stay in an escrow account for the meantime.
- Due diligence period. Unless the buyer chooses it, there will be up to 10 days for an inspection. This gives the buyer time to back out of the contract if the condition of the home is not satisfactory.
- Home insurance. You must acquire a hazard home insurance first before applying for financing. It will help the mortgage company to decide if you are worth the risk. The insurance protects homeowners from specific damages to the home, depending on the policy you buy. Your policy could cover damages that are caused by flood, fire, vandalism, theft, and other events.
- Appraisal period. The mortgage company may choose to hire an appraiser to determine the value of the property. The lender may, however, skip this step if the buyer pays in cash.
- Mortgage or financing. Settling your financing, such as a mortgage application, comes next. It is a time-consuming process as you may have to submit the proper documentation such as your personal details, employment, and income. You can prepare all these documents ahead while you are still processing the previous steps.
- Contingency on the former home. As a buyer, you must check if there’s a contingency that came with your former home. Some contracts state that you must first complete the sale of your former home before acquiring another.
- Settled title search. Another process that sellers must first work on is to make sure that nobody else will be claiming the house after or during the sale or after closing on a house.
- Optional walk-through. During this time, it may also be the first instance that the buyer is viewing the home without the seller’s furniture. It allows the buyer to see the home in a new light.
- Fund transfer. A closing attorney must receive the mortgage company’s financing, the earnest deposit from the escrow, and the down payment.
- Closing of sale. The buyer sits down with the real estate agent and the closing agent to witness the signing of documents that will transfer property rights to your name. Expect to spend at least an hour on this part.
Possible Cause Of Delays
The buyer and the seller may choose an earlier closing date. However, that deal will only be completed if everything you need is in order. There could be factors that can cause the closing to be delayed, and some of these are the following.
If you want to make the closing faster, settle your funding right away since it is one of the major factors that will get you to close the deal. Do remember that there is also a high chance for your application to be denied if you have no credit or bad credit history, a high debt-to-income ratio, and a low down payment. Delays may also happen if you have missing information on your application.
It can sometimes happen that mortgage satisfaction may not have been recorded after it was closed. The sellers can also be in a divorce battle, or the property is under probate. To avoid the headache of tax liens, submit a copy of the title company’s satisfaction before the title search.
Sellers may miss a few details that the buyer can easily spot. Depending on the deal, the sellers may choose to make specific fixes. It rarely happens, but this can lower the price of the property. Buyers can also opt to fix the house through a tax credit.
An appraiser must gain access to the home, and if he or she names a lower price, the mortgage creditor must create adjustments to the loan price. This process doesn’t happen overnight. It is also best to inform the mortgage company to have the home appraised first before making any decision.
Buying a home is usually considered a major milestone in one’s life, as it is seen as a reward for working diligently throughout the years. The process that it takes to closing on a house takes patience and may cause stress and frustrations because of rejections and delays in financing, titles, and existing property issues. However, careful planning, preparation, due diligence, and cooperating with the right people can ease the whole process. After all, the house of your dreams is waiting at the end of the tunnel of all that paperwork.
Tillie Schaefer is a successful blogger who regularly publishes articles on finance and investment on her blog. Tillie also works with finance-related websites to submit guest posts and engage with more readers.