Many buyers in the market for a new home are eager to get through the buying process as quickly as possible, but closing on a house can take time.
On average, it takes a U.S. homebuyer from one to two months to go through the process of closing on a house from the time their offer is accepted. But each buyer’s situation is unique, so the exact time it takes to close can vary significantly, depending on a number of factors.
Here, we detail several reasons why closing on your home may take more time than you expect, as well as offer ways to speed up the process. Keep in mind that while you can keep things on the fast track, it’s never a good idea to unnecessarily rush any part of making a major purchase like a home.
1. Preparing to Make an Offer
The first step to homebuying is determining how much home you can afford, where you want to live, and what features you want in a property. Review your budget and estimate affordable monthly payments, perhaps with the help of a mortgage calculator or a financial advisor. Then, use one of the many online property search sites to get a jump-start on shopping for property.
When you’re ready, plan to hire a certified real estate agent who can guide you through the buying process. While Realtors do take a commission, they can also use their expertise to save you money and time during several steps of homebuying, including your search for a home. An agent can quickly vet properties with your criteria, present options and set up appointments for you to view your top picks.
2. Making an Offer
When you’ve found a home, it’s important to make an offer promptly, especially in a competitive market. Again, a Realtor can help expedite this process. Your agent can review the listing prices, the prices of nearby properties and the overall local housing market and help you determine a good opening price.
Once you’ve made an initial offer to a seller, negotiations may begin. The buyer and seller will often then go back and forth with counter offers, which may take several days. The negotiations may be a straightforward and fast, or they may take longer on points like closing costs, warranties and even home furnishings. Total negotiating time can take as little as an hour or up to a couple weeks, depending on each side’s negotiating strategy.
3. Finalizing Financing
Most buyers need a mortgage to buy their home, but the application and approval process can be one of the most time-consuming parts of homebuying. After all, mortgages are among the largest consumer loans, so banks tend to take their time making sure borrowers are not likely to default.
To get a mortgage, home buyers must submit proof of income and wait for a bank or credit union to pull their credit history and verify their finances. The entire process can take several weeks. One way to expedite this process is to have all your documents like your bank statements, pay stubs and tax returns on hand, so searching for them does not delay your loan application.
Getting a pre-approval from a lender before you make an offer is among the best ways to speed up the home-buying process. A pre-approval is essentially a letter from a bank estimating the amount expects it would approve for a mortgage for you. While you don’t necessarily have to get a mortgage through that lender, a pre-approval can give you an edge in over other buyers when you make an offer.
In addition, if you do get a mortgage through the bank that pre-approves you, the homebuying process will likely be faster because you will have had a head start with having your finances verified.
On a side note, if you can pay cash for your home, you can avoid the lending process altogether. While paying cash does have some downsides such as reducing your financial liquidity, it can shave several weeks off the total time it takes to close on a home.
4. Getting an Inspection
Typically, a home offer will include a contingency that allows for an inspection. Most buyers will conduct an inspection of the property to ensure that there are no hidden problems or major issues. This means that you, perhaps with the help of your realtor, must schedule an appointment from a certified inspector. It usually takes a couple days for an inspector to review a property, but it can take longer depending on their availability. The inspection itself typically takes about two hours.
With the inspection results, you can then decide whether you want to move forward with buying the property as is, or whether the current owner needs to make changes. If you’re working with a lender, they may require specific repairs. Of course, if the house needs any improvements, that will further delay your closing, depending on the extent of the work.
5. Securing Title and Home Insurance
If you’re getting a mortgage, you will probably have to get title insurance to protect your property against any title issues. If any problems arise during the sale, the title insurance company will be responsible for paying legal damages.
In this two-part process, the title company first researches to make sure there are no hidden claims to the deed. If there are problems, then your home-buying process is likely to be delayed until they are resolved. If not, the company can issue title insurance policies that protect the lender and buyer.
Similarly, you will likely also need home insurance to protect the value of your property in the event of, say, a destructive fire or hurricane. To help make sure getting home insurance doesn’t delay your closing, try to shop around for a policy as soon as you know what kind of property you want. Figure out whether you will want liability protection as well.
With more of your questions on title insurance and home insurance answered before an offer is made, you can be better prepared to buy a policy more quickly.
6. Selling Your Home
Some offers include the sale of the buyer’s home as a contingency. If you need to sell your home in order to help finance your new one, your buying process may be delayed depending on market conditions and other factors that affect how fast your home sells.
Many buyers put their home on the market or in escrow before making an offer to speed things up. Talk to your Realtor about the best strategy for listing property in your market.
7. Less Common Factors
Many other factors can delay a closing on a house. For example, if the current property owner passes away after an offer has been accepted, but before the sale has been finalized, the estate most likely must be probated. Essentially, the buying process will be delayed for perhaps several weeks, depending on the state laws, as it undergoes a court-supervised process.
Or, if your lender runs a final credit report that shows you have more debt or a lower credit score, your financing could be delayed, and the date for your closing on a house may be postponed. You may have to wait for your credit to return to the bank’s standards – that is, if the seller is willing or obligated to wait with you.
Other potential snags to closing include Mother Nature. If the property you’re buying suffers damage from a natural disaster like a tornado or earthquake, your lender will likely expect those repairs to be made before you sign for the keys, which obviously would put off your closing date.
8. The Day of Closing on a House
On the day of your closing, you can expect to spend up to several hours signing papers to finalize your major life purchase. Like the overall closing process, the time required on the day of closing hinges on a number of factors.
This is also the day you’ll spend some time in a final walk-through of the home. The time it takes to complete a walk though will depend on the size of your home and the number of concerns about the property you need to check. This is when you will make sure all your conditions have been met and that the property hasn’t undergone changes you didn’t agree to. For example, you may do an inventory on appliances or ensure a roof repair has been made.
If a buyer notices something that does not meet the conditions listed in the contract, the closing process could be delayed until it is resolved.
The Bottom Line
The key to ensuring a smooth home-buying process is to maintain good communications with both your lender and real estate agent during each step. Also, prepare as much as you can in advance.
Then, after you finalize on closing day, the house officially becomes yours and you can start a whole new process of moving in.