Once you’ve made an offer on a house that’s been accepted, it’s time to celebrate. But after you’re done toasting your good fortune, you’ll quickly find that the road to homeownership has only just begun.
As you prepare to pack up your boxes and navigate moving vans, one of the details that will be at the center of your plans is how long it takes to close. Here’s everything you need to know to land on a date.
What exactly is closing?
Closing is the time period between when a seller accepts an offer and when the home is actually considered sold. During this time, the home is listed as “under contract,” and as long as all of the ins and outs of the contract are met, the sale will be finalized. This means there’s no need to worry about another prospective buyer rushing in and extending a better offer.
When you and your real estate agent were putting together your offer, you likely added line items or contingencies, such as “pending inspection.” You also put down an earnest money deposit, which is what created the legal contract. As part of this legal contract, you’ll need to take care of arranging a home inspection, financing (which will require an appraisal), insurance, and title review.
Closing is, unfortunately, one of the least-exciting periods of homebuying, but taking the time to make sure all of these seemingly minor pieces fall into place is the best way to make sure that you won’t have major issues that need to be addressed later.
Because closing relies on so many individual components, no one can tell you exactly how long your closing will take. Andy DeMuth, an agent in Louisville, Kentucky, with 27 years of real estate experience, says that he’s seen closing go from 21 to 45. For FHA and VA loans, DeMuth has seen closings take up to 60 days. There’s clearly a huge difference from a planning perspective between 20 and 60 days, and that kind of uncertainty is understandably nerve-racking.
Understanding all of the components to closing that need to happen — and when they need to happen — can help you approximate how long closing will take for you, and what you can do to help yours go smoothly.
The inspection stage
One of the major components of the closing period is completing a home inspection. Home inspections were responsible for 17% of closing delays as of June 2019.
A home inspection is almost always included as a contingency in an offer, and for good reason. No one wants to inherit a bevy of major structural issues that they’ll be blindsided by later, and a good inspector can make sure everyone is on the same page.
Get on the schedule of a home inspector you can trust
Your agent will be able to recommend a good home inspector. Even if the home sellers offer to provide a home inspection, or have already conducted an inspection, it’s a good idea to secure your own inspector as well.
Unfortunately, one of the factors that affects the closing period the most is how quickly you can find a home inspector with availability. In some areas, home inspectors are booked out well in advance.Your contract will tell you how long you have to get a home inspection completed.
While it’s usually around 10 days, it can be as little as a week. If you’re unable to get a home inspection completed in the time frame due to availability issues, contact your real estate agent right away to amend the contract. You may also want to ask if a home inspector would be willing to accept a rush fee to accommodate you.
What to expect from the home inspection
Home inspectors will do their best to uncover major home issues so that hopefully you won’t have any nasty surprises related to the HVAC or foundation after you move in. If you can attend the home inspection, it’s a great opportunity to learn more about your house. You might even get some pro tips on home improvement ideas that you should tackle during move-in.
It can be disappointing when a home inspector does find a major issue because it will slow down the closing process, but it’s actually good to have the opportunity to fix any major issues before the closing is completed.
What the home inspection covers (vs. what it doesn’t)
The home inspection process isn’t perfect, and it doesn’t look at every possible thing that can go wrong, but it’s still an important step. A traditional home inspection includes the structural components of a home, like the foundation, windows, and doors, but also encompasses some of the internal systems that are so important, like the heating and AC, plumbing, and electrical systems.
Extra (specialized) home inspections you can opt for
Depending on your area, there are additional inspection types that you can request. Some examples of these include termite, radon, and mold inspections.
Termite issues in particular can cause delays in the closing process. Sellers are typically responsible for mitigating termite issues, but sometimes it’s a challenge to get sellers to agree to take care of pest issues. It’s well worth it to wait for these issues to be resolved, though.
Resolving pest issues typically requires a home to be unoccupied due to the hazardous chemicals that are used in the pest removal process, so it’s really the ideal time to handle these pests. Typically you’ll need to be away for a minimum of 24 hours for fumigation, but for babies, pets, or those with respiratory issues it’s safer to be away for longer.
After the home inspection: Where do you go from here?
If the home inspector’s report turns up issues, then there are several possible options.
Most commonly, the buyers will file for a repair request. Repair requests should be reserved for issues that are serious enough that they need to be repaired prior to move-in and may even affect the financing depending on your loan. If there are a substantial number of repairs, then that can also delay closing.
A door that creaks isn’t worth filling out a repair request for, but a window that’s cracked would be. If you’re very concerned about the closing timeline, some buyers request a cash credit rather than a repair.
Getting a cash credit rather than a repair does put the onus of home repair on you rather than the seller, but depending on your schedule and how you want the repair completed, it might be the right move for you.
If the issues found during the home inspection are serious enough, you can back out of the sale entirely. This typically happens for only serious issues, such as those related to the foundation. Home inspection issues are one of the many situations where you’ll get your earnest money deposit returned to you, but then you will have to start the home shopping process again from square one.
A real estate appraiser’s job is to evaluate the worth of a home. Appraisers look at historical data, external factors, home improvements, and numerous other factors in order to assess a home’s worth.
Most banks are looking to finance between 80% and 97% of a home’s fair market value, which is why an appraisal is an important step of the closing process. It’s also why you can bypass this step entirely if you’re paying all cash and are confident that the home is worth the price you negotiated.
The second-largest cause of closing delays (by a single percentage point) is the ominously named “appraisal issues.” Appraisal issues cause 18% of real estate delays as of June, 2019. Usually, the appraisal will take place about a week after the home inspection, but in some areas appraisers are overloaded and it can take up to three weeks.
There are a lot of new regulations governing property appraisers that can further delay the process and consequently create a longer closing period. Unfortunately, most of the tasks that can speed up or slow down an appraisal are dependent on the seller, and there’s very little a buyer can do to expedite the process.
If you and your real estate agent are confident that you extended a good offer and are getting a good value, then there’s not a lot to be concerned about. The problem occurs if the appraiser thinks the house is worth less than you offered.
In areas where the home value has just seen significant growth in a short period, the home might be worth exactly what you offered but still be evaluated as worth less than that. If your appraisal comes in lower than your offer, you have a few options: you can renegotiate the price with the seller, ask for a reevaluation, or come up with a larger down payment.
A good real estate agent who knows the area is your best resource in these situations and should be your go-to when you’re evaluating which option to pursue.
Does the seller even have the right to sell their home? That’s what a title report conducted by a title insurance company will reveal, and issues revealed during title review were responsible for 11% of closing delays as of June, 2019. If a former spouse or previous owner still has some claim on the title, then the sale might not be legal. Likewise, if the current owner has a lien on their home, that will need to be resolved before closing.
The objective of this step is to protect you from future title issues. Nobody wants to have someone show up and claim ownership of their home, especially if that stranger does have a legitimate claim. And if the former owner was delinquent on their taxes, it isn’t fair for you to be stuck with that bill.
The lender will get title insurance on the house if you have a mortgage loan, and although title insurance is optional for buyers, it’s usually worth the cost. Title insurance typically costs 1% of the value of a home, but that amount varies considerably.
Though it can feel expensive to pay for title insurance during closing, if the title company misses something in the title search and a legitimate claim is made on your home after closing, title insurance will protect you by handling the claim with no cost to you.
Title research is unfortunately another stage where there’s little a buyer can do to expedite the process.
Insuring your new home
Much like purchasing a car, if you’re getting financing to buy your home, you don’t have a choice: you must buy insurance for your house. Thankfully, insurance was only responsible for 2% of closing delays as of June, 2019. It’s a normal requirement for buying a home, and you’ll likely want to keep insurance permanently.
Home insurance protects a wide variety of things. Not only does it cover the structure of the home as well as built-in appliances from a variety of perils, including fire or windstorms, but it also protects your belongings, and it shields you from liability if someone is hurt at your home.
If you already have car insurance, that should be the first company you check in with to see if they have a bundle deal for people who get their auto and home insurance from the same place. That said, you should always get quotes from multiple companies.
There can be issues during the insurance step. If an insurer declines to insure your home because you live in what’s deemed a high-risk area, it can make the entire loan crumble. Though this is a terrifying possibility, if you’re working with a real estate agent who’s familiar with risk factors like flood zones, it’s not a likely one.
Getting your new home insured is one of the easiest steps in the entire closing process, and it’s entirely within your control as the buyer. While other steps are dependent on the seller, the home inspector, or the appraiser, this one is as easy as doing a little research and making a couple of phone calls.
If you’re selling an existing home as well as purchasing a new one, go over the details with your home insurance agent. They may be able to keep you appraised of options that will address your changing needs. Just make sure you don’t end up with a gap in home insurance coverage.
The loan itself
The mortgage loan is — by far — the most time-consuming portion of the closing process, and the step in which delays are most likely to emerge: 41% of all delays as of June, 2019, were due to the loan.
Every homebuyer should be preapproved before making an offer on a home, and some lenders even offer pre-underwriting for an additional layer of certainty. DeMuth mentions that there’s absolutely no downside to preapproval, and in almost all cases it will be necessary to get preapproval before extending an offer.
Even with preapproval, though, when the house is under contract, there’s another hurdle to clear before your mortgage loan can be issued: underwriting. Underwriting is the nitty-gritty of your home loan. It’s the stage where your lender gets out a highlighter and reviews all of the loan documentation that you had to prepare to ensure that your risk level is exactly what it’s estimated to be. Though this stage can be a bit of a nail-biter, as long as you’ve been upfront and honest, there’s little to worry about.
In addition to getting prequalified, or preapproved, many homebuyers are now getting pre-underwritten. Pre-underwriting is a step that you may want to consider if you’re especially interested in a quick closing. To be pre-underwritten means that an underwriter has already reviewed and verified all of your financial and credit documents prior to extending an offer on a house. Though the home inspection, appraisal, title review, and any other contingencies will still need to be completed, this takes care of the most time-consuming part of the loan process early on.
Not only can this greatly simplify your closing process, but it can even give you an edge in the event that there are simultaneous offers on a home.
Otherwise, you can expect the loan closing process, including underwriting, to take anywhere from four to six weeks. Fortunately, most of that time requires little from you — as long as you’ve prepared all of your required documentation. This allows you to work on other aspects of closing, like packing your belongings and figuring out exactly where you’re going to place that couch.
There are some parts of the mortgage loan that you need to be aware of during closing. The financing that you’ve secured is dependent on your credit score, your income, and your debts.
You can’t allow any of those three factors to be affected before everything is finalized, or it could put the closing in jeopardy. Even actions that may seem smart or fiscally responsible, like closing a credit account, can delay or cause issues with your closing. So, don’t open any new credit accounts, even for necessities like household appliances, don’t close existing accounts, and make sure you continue to pay your existing accounts on time.
What can homebuyers do to make closing go quickly?
Unfortunately, there’s only so much you can do as a buyer to make closing go quickly. Getting preapproved or pre-underwritten is a good first step. Additionally, you can make sure that all of your paperwork is ready in a timely fashion and respond quickly to any requests from your home lender.
Having a top-notch real estate agent who’s technically savvy is a huge benefit as well. If you can’t check personal email frequently at work, then having an agent who will text you as needed keeps you fully aware and up-to-date on requests. DeMuth makes sure to send out emails to everyone and then follows up with a text; this helps him deliver quick responses and keeps everyone on the same page through the closing process.
Closing on your new home
Though closing on your new home can be a frantic time period full of long to-do lists and time-sensitive requests, having a real estate agent who is familiar with the local area can make the process much simpler.
By taking time early on in the process to go through preapproval, and perhaps even get pre-underwritten, you can reduce the likelihood that there will be unexpected delays — all of which gives you more time to think through the fun parts of moving, like designing your new home and getting to know your neighborhood.
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