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All the hard work and stress of buying a home pays off in a big way when you get your keys on closing day. But a lot has to happen before then. This guide to buying a house explains what you need to know about closing on a house so you can close on time — with a minimum amount of stress.
Here’s what you need to know about closing on a home loan:
- How long does it take to close on a house?
- What happens when you close on a house?
- What can delay your mortgage from closing?
How long does it take to close on a house?
Although it’s possible for a cash sale to close within a couple of weeks, the timeline is more like six to seven weeks if you’re financing your home with a mortgage loan. During this time, several things are happening at the same time:
- Buyer’s obligations: Your first steps are to choose a title company, apply for your mortgage loan, order your home inspection (optional), and secure homeowners insurance.
- Title search: The title search ensures there are no liens on the title and checks for other title issues. At the end of this process, the title company issues title insurance, which protects the lender’s investment by guaranteeing clear title.
- Loan processing: The lender starts processing your loan application as soon as you’ve submitted it with a copy of your sales agreement. The lender will order an appraisal to verify the property’s value and evaluate your credit history, income, and debt to ensure that you qualify for the loan. This part of the process is called underwriting, and you’ll be asked to submit tax returns, bank statements, income verification, and, perhaps, other documents to get the ball rolling.
Here’s a rundown of some of the major steps to closing on a house and how long they take:
|Step||Typical time it takes|
|Initial negotiation||Varies, but allow 48-72 hours|
|Open escrow||Shortly after offer is accepted|
|Clear title||About 2 weeks|
|Home inspection||Within several days of signing contract|
|Repairs||Depends on the severity of the issues|
|Appraisal||Depends on the lender
(report delivered about a week after appraisal is complete)
|Loan processing||6 to 7 weeks|
|Final walkthrough||30 to 60 minutes on or immediately before closing day|
|Closing||1 to 2 hours|
Keep Reading: How Long It Takes to Buy a House
What happens when you close on a house?
Closing on your house finalizes the loan and the transfer of ownership from the seller to you. This is when all the money is distributed and you get the keys to your new home.
Here are a few tips and things to know about closing:
What should you bring on closing day?
Come closing day, you’ll need to bring a photo ID, like a driver’s license. You’ll also need a cashier’s check for your down payment, although arranging for a wire transfer is easier and more secure. You’ll also need proof of insurance if the title company hasn’t already requested it.
What will you pay at closing?
Expect to pay the balance of your down payment and pay up to 5% of the purchase price in closing costs on closing day. The range of possible closing fees is extensive, and you might pay some, such as the loan application fee and home inspection fee, at the time you incur them.
Here are some examples of fees you might pay at closing and the typical cost of each:
|Type of fee||Typical cost|
|Down payment||Up to 20% of loan
(depending on loan type)
|Appraisal fee||Around $300 to $500
(but can cost significantly more)
(for property tax and homeowners insurance)
|Prorated for the portion of the year you’ll own the home, plus reserves|
|Real estate transfer taxes and fees||Varies by location|
|Title insurance||Around $1,000, but varies by state and home price|
|Loan origination fee||0.5% to 1.5% of loan amount|
|Prepaid loan interest||Amount that accrues between closing day and the date your first mortgage payment is due|
(required with a down payment less than 20%)
|Loan discount points
|Each point equals 1% of loan amount|
What paperwork will you need to fill out?
The title agent will have a stack of documents for you to sign at the closing table. The documents primarily consist of disclosures and agreements related to the loan and the transfer of title from the seller to you.
You’ll also sign a closing disclosure that itemizes all the costs involved in the home purchase and indicates who is being charged or credited for each fee.
Who is present at the closing?
A typical closing includes:
- Their agents
- The title agent or attorney who conducts the closing
There might also be a representative of the lender present, but this isn’t always the case.
What can delay your mortgage from closing?
A home sale has a lot of moving parts, so sometimes there might be delays. Most delays are short and fairly easy to resolve. Here are some common ones:
- Financing issues: You can breathe easy where your finances are concerned after closing on a house. Until then, know that your mortgage pre-approval isn’t a loan guarantee. Missing financial documents or a change to your bank balances or credit can raise a red flag that might prompt the lender to take a closer look before it approves your loan.
- Title issues: After financing, title work has the biggest impact on how long to close on a house because you can’t close without a clear title. Discovery of a lien against the property, such as an old tax or mechanics lien, can delay closing until it’s cleared up.
- Condition issues: Your final walkthrough ensures that the home is in the same condition it was in when you made your offer — or that agreed-upon repairs are complete. When the walkthrough reveals issues with the condition of the home, you might have to delay closing until they’re resolved.
If you’re ready to find the right mortgage for you and close on a home, be sure to shop around and compare rates with multiple lenders. You can do this easily with Credible — and you’ll be able to see your prequalified rates in only three minutes.