After months of research and several rejected offers, you are finally under contract and can start bribing your loved ones to come and help you move. Cheer! But for what day do you reserve the truck? Your individual mortgage closing time varies more than you might think.
Key points to remember
- Ask your lender and your real estate agent for an estimate of the closing time.
- Lock in your rate quickly and respond to all questions and requests for documentation from your lender as quickly as possible.
- Conventional mortgages close in 57 days on average.
- More complex mortgages like FHA loans close on average in 62 days.
Closing timelines by mortgage loan type
Conventional mortgages are the most common type of mortgage and take an average of 57 days to close in 2021, the most recent figures available, according to ICE Mortgage Technology (formerly Ellie Mae, the mortgage application processor).
FHA Loans take a little longer to close due to additional documentation requirements and take an average of 62 days to close.
VA Loans have the most complex underwriting requirements and are only available through VA-approved lenders. As a result, they take the longest to close with an average of 66 days.
Steps in the closing process
Once your offer has been accepted, there are still several steps to your closing process. You can save a lot of time when closing by choosing your lender, loan type, and home inspector in advance. You’ll also want to get pre-approved from your preferred lender and have all of your paperwork in order before entering into a contract. Note: Some of the following steps may be done out of order or may be done out of order depending on your lender.
- Schedule your home inspection right away. Depending on your area, building inspectors can be in high demand and schedule several weeks.
- Authorize a firm credit application with your lender.
- Block your rate. Deciding when to lock in your mortgage rate can be tricky, but decide quickly so your loan can close on time.
- Ask your lender to schedule your appraisal immediately. Appraisers are often booked for several weeks.
- Provide the documentation to your lender. This will depend on your personal situation, but at a minimum you should be prepared to submit bank statements, pay stubs, two years of tax returns, photo ID, and your social security card.
- The home inspection is complete. Negotiate any issues with the seller to your satisfaction and that of your lender.
- The assessment is complete. If there is a discrepancy between the appraised amount and the sale amount, you will need to cover the difference, obtain alternative financing or negotiate with the seller.
- Respond to any questions or requests for additional information from your lender as soon as possible.
- Receive and review your final disclosure. By law, your lender is required to give you a closing disclosure at least three business days before closing.
- Close your new home!
How can I speed up the closing process?
The best way for you to speed up the closing process is to provide exactly what your lender is asking for, as quickly as possible. If your lender needs every page of your bank statements, including blank pages, send them every page of your bank statements. Often the documentation requirements for a mortgage seem tedious, but cooperating as soon as possible is the best thing you can do to speed up your closing process.
What can delay the closing process?
Major changes in your creditworthiness, such as applying for a new line of credit or changing jobs, are notorious ways to delay closing. Even if you desperately need a new car loan to replace a totaled vehicle, or if you can’t stand your boss anymore, wait a few weeks to close if you want to be able to buy your house. Other common issues that can delay closing are changing lenders, limited availability of local appraisers, inspection issues that need to be resolved, and delays in locking in your mortgage rate.
What happens if I don’t close on time?
If you don’t close on time, the seller of the property could cancel the transaction and potentially sue you under the terms of your contract. This is more likely if the seller has received better backup offers or is dependent on closing this sale in time to be able to close their next home. In this case, you would also lose your deposit. If you are unable to close in time, most often the parties will agree on an amendment to the initial contract extending the deadlines. It’s not guaranteed, so do your best to stick to your original contract, as it can get expensive if you don’t close on time.
Many lenders, including Chase, have started offering a closing guarantee. The terms of each offer vary, but most agree to pay you a fixed amount if they can’t close your loan on time.
Do I have to waive my inspection to close more quickly?
Your lender will usually require an inspection – and if you get an FHA loan, it’s mandatory. If an inspection is not required in your situation, you have the option of waiving it. Waiving your home inspection could make your real estate offer more likely to be accepted and it could allow you to close your loan faster, but at great risk. The biggest risk of foregoing an inspection is that the home you are buying needs major and expensive repairs that might have been uncovered during the inspection. If you choose to waive your inspection, be sure to consider the risks.
How long it takes to close your mortgage depends largely on the type of loan you choose and the timeliness of appraisers and home inspectors in your area. Respond to all inquiries from your lender as quickly and accurately as possible to get things done. Make sure you don’t make any drastic changes to your financial situation while you wait. Congratulations, owner!