This Is The Average Length Of The Closing Process In Real Estate
The closing process in real estate can seem daunting. It's the final piece to buying a home before you get the keys, where all of the details of the transaction are verified and approved. At this point, you've found a home, submitted a bid, and received approval.
Even while thinking about the perfect furniture for the living room, there's still much for all parties to do during the closing process. That typically includes verifying the home's condition, completing the formal loan process, and signing documents.
The closing process starts when the seller agrees to the terms of your offer. It's often best to have mortgage pre-approval in place before placing the offer, as that can make the closing process a bit easier and quicker, according to Investopedia.
You'll then need to work through a number of steps, including opening and funding escrow, negotiating closing costs, having a home inspection, and meeting any lender requirements. Your lender may request updated income and expense documents as they verify your current financial health.
It's going to take some time
The typical closing process in real estate takes 30 to 45 days, though it could be longer, according to Rocket Mortgage. This can range depending on the type of loan you have and just how busy your lenders are. Federal Housing Administration (FHA) loans typically take longer because of the more thorough requirements of home inspections.
The closing time could be longer if the seller needs to make repairs due to home loan contingencies in the offer contract. Also, if the home inspection reveals any concerns, you may need to go back to renegotiate the terms, which could delay the process a bit.
A shorter closing may be possible if you're financials are in order, and all of the underwriter's questions are answered. That typically includes the home appraisal process and inspection. Be sure to remain in contact with your lender throughout the process to ensure all needs are met quickly.
The actual closing takes a day
The full closing process in real estate takes several weeks, but the actual closing — the day you sign the documents — takes just a couple of hours. This is when the home buyer sits down with their lender or a title company representative to go through dozens of documents. That includes your promissory note, which outlines your agreement to repay the full amount you're borrowing.
Other documents in the closing include a mortgage loan, with all of the details of the loan payments you'll make, and the deed of trust, which gives the lender the right to foreclose or sell your home if you fail to make payments.
On closing day, you'll need to make any closing cost payments on your loan. This is also when the home's title transfers, giving you the legal right to own the home. It's always important to review all documents carefully before signing. According to the Consumer Financial Protection Bureau, you have the right to ask questions during the closing for clarification.
Once complete, the funds transfer from your lender to the seller. Within a day or so, you'll have keys in your hand.