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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.
Here’s what you need to know about the home closing process so that you can close on time — with a minimum amount of stress:
- What is a home closing?
- How long does it take to close on a house?
- How to prepare for your closing
- What will you pay at closing?
- What happens on the day of closing
- What can cause delays at closing
What is a home closing?
A home closing finalizes the loan and the transfer of ownership from the seller to you. This is when you’ll pay closing costs and get the keys to your new home.
You’ll fill in your preferred closing date when you write the offer. However, the actual closing date depends on how long it takes for the mortgage lender to process your loan.
Find Out: No-Closing-Cost Mortgage: Is It Actually Worth It?
How long does it take to close on a house?
Closing usually occurs six to seven weeks after the buyer’s offer is accepted. Although it’s possible for a cash sale to close within a couple of weeks, the timeline is generally longer for purchases financed with home loans.
There are a few things that you should do to start moving the transaction toward closing:
- Order a home inspection: The inspection isn’t required, but without one, you could be responsible for defects discovered after closing. It’s up to you to order the inspection — your lender will not do it for you — and you should make every effort to attend it.
- Secure homeowner’s insurance: The mortgage lender will require proof of insurance before closing.
Once you’ve submitted a copy of your sales agreement, the lender will begin processing your loan application. They will also 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.
How to prepare for your closing
You’ll be clear to close once the loan processing and title work are finished. You can confirm your closing date at that point.
What should you bring on closing day?
The closing agent — usually a representative from the title company — will have all the documents you need to sign waiting for you at closing. But you’ll need to bring a few things:
- Photo ID, such as a driver’s license
- Wire transfer or cashier’s check for your down payment
- Proof of insurance, if the title agent hasn’t already verified it
What will you pay at closing?
Expect to pay the balance of your down payment and up to 5% of the purchase price in closing costs on your 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 a few 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) |
| Escrow deposits (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 |
| Mortgage insurance (required with a down payment less than 20%) |
|
| Loan discount points (optional) | Each point equals 1% of loan amount |
What happens on the day of closing
If you prefer, you can choose to do a last-minute walkthrough of the property on the day of closing. The walkthrough ensures the home is in the same condition as when it went under contract, and that all negotiated repairs are complete.
- The seller and their agent, if the seller hasn’t yet signed their documents
- The title agent or attorney who conducts the closing
- A representative of the lender, in some cases
The settlement agent will have a stack of documents for you to sign. These will primarily consist of disclosures and agreements related to the loan and the transfer of title from the seller to you.
You’ll also sign the closing disclosure that itemizes all the costs involved in the home purchase and indicates who is being charged or credited for each fee.
Closings usually take a couple of hours, especially if the seller is attending to sign their documents.
Learn More: Can You Close on a House Remotely? Buying a Home Online
What can cause delays at 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: 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 multiple lenders. You can do this easily with Credible.
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