You’ve found your dream home, and your offer has been accepted. But how long will it take to have the keys in your hands? It is essential to understand that buying a home involves more than finding the right property. The final stage of buying your home is closing on the property. This is the most crucial stage because this is when you finalize the deal and become the official owner of the house.
But how long does it really take to close on your first home? What are the potential delays, and what can you do to speed up the process? In this post, I will answer these questions and provide tips to help you close on your first home faster and easier.
What Is Closing on a Home?
Closing on a home is the final stage of the home-buying process. It involves signing the necessary paperwork, paying closing costs, and transferring property ownership from the seller to the buyer. It also marks the end of your mortgage application process, as your lender will fund and record your loan.
Preparing for the Home Buying Process
You should follow some steps to ensure a trouble-free home-buying experience. First, you need to determine what type of home you want to buy. Do you want a single-family home, a townhouse, or a condominium?
You should also consider the location of the property and the amenities that are important to you. Once you have a clear idea of what you are looking for, you should start saving for a down payment and closing costs.
Importance of a Pre-Approval Process
The pre-approval process is crucial If you intend to buy your home with a mortgage. Pre-approval gives you an estimate of your closing costs. The pre-approval letter will include an estimate of the fees and expenses you will pay when you finalize the deal and get the keys to your new home.
These include costs like appraisal fees, title insurance fees, origination fees, recording fees, and taxes. Knowing these costs in advance will help you plan your finances and avoid surprises at closing. The process also shortens the closing period because most financial paperwork is processed.
It’s prudent to shop around for different lenders and compare their offers before choosing one with the most favorable terms. Getting pre-approval letters before you start looking for homes is also advisable, as pre-approval letters are usually valid for 60 to 90 days.
What Factors Impact the Time It Takes to Close on a Home?
On average, it takes 30 to 45 days to close on a home, but the timeline can vary depending on several factors:
- The type of loan you are using. Some loan programs, such as FHA and VA loans, can take longer to close than conventional loans because government-backed loans have stricter requirements and more paperwork involved.
- The condition of the property. Lenders usually require an appraisal or an inspection to verify the value and safety of the home. If any issues are found, they may need to be fixed before closing or negotiated with the seller.
- The length of the title search period. The title company is responsible for conducting a title search and issuing a title insurance policy that protects you and your lender from any claims or liens on the property. The title company also handles the escrow account that holds your earnest money deposit and closing funds. If the title company is slow or makes mistakes, it can affect your closing time.
- The real estate market condition. For example, a high demand for mortgages or appraisals may cause delays in processing your loan or valuing your property. Similarly, if there are any changes in interest rates or lending guidelines, it may affect your loan approval or closing costs.
The Average Timeline for Closing on a First Home
It takes 30 to 45 days to close on a home. However, the timeline can vary depending on several factors, including the type of loan, the condition of the property, and the efficiency of the parties involved in the transaction. It is essential to work closely with your real estate agent and lender to ensure the closing process goes as smoothly as possible.
Tips for Speeding Up the Home Buying Process
You can do several things to get your home keys faster:
- Have all your financial documents in order. This includes your tax returns, bank statements, pay stubs, and proof of funds for your down payment and closing costs. Having these documents ready will help you get pre-approved for a mortgage faster and avoid any requests for additional information from your lender.
- Be responsive to any requests from your lender or real estate agent. If your lender or agent needs any documents or information from you, provide them promptly and follow up to ensure they receive them. This will help you understand the process smoothly.
- Engage a reputable and experienced real estate agent. A good agent can help you find the right home for your needs and budget, negotiate the best deal with the seller, and guide you through the closing process. They can also help you avoid any pitfalls or problems that may arise along the way.
It is not uncommon to encounter several delays that prolong the closing period. Which are these delays, and how can you avoid them?
- A low appraisal
The lender may not be willing to lend you more than the appraised value of the home, delaying the process. To avoid this, ensure you are working with a skilled real estate agent who can help you price the property correctly and provide comparable sales data to support your offer. You can also request a second appraisal or challenge the first one if you believe it was inaccurate or unfair.
- Issues with the title
The title company will conduct a title search to ensure the property is free and clear of any liens, claims, or encumbrances that could affect your ownership rights. If any titling problems are found, such as unpaid taxes, judgments, easements, or errors in the deed, they will need to be resolved before closing.
Choose a reputable title company with experience in your area and ask for updates on their progress to avoid this delay. You should also purchase title insurance to protect yourself from future property claims.
- Problems with the inspection
If problems are found during the inspection, you may need to negotiate with the seller to fix them, lower the price, or offer a credit at closing. This can cause delays if the seller is unwilling to cooperate or the repairs take longer than expected.
You should inspect before making an offer and request a seller disclosure statement listing any known problems with the home. You should also hire a qualified and licensed inspector who can provide a detailed and accurate report.
- Delays in getting the loan approved
Depending on your lender and loan program, the approval process can take several weeks or months. The factors affecting your loan approval include your credit score, income, debt-to-income ratio, down payment amount, interest rate, and loan terms. Any changes in these factors can cause delays or the denial of your loan.
To avoid this delay, you should get pre-approved for a mortgage before you start looking for homes and lock in your interest rate as soon as possible. You should also avoid making major changes to your financial situation, such as opening or closing credit accounts, applying for new loans, changing jobs, or making large purchases.
Working with a Real Estate Agent to Speed Up the Process
A capable real estate agent is beneficial in speeding up the home-buying process. Take a look:
- A good agent guides you through the closing process.
- The best real estate agent alerts you to potential hurdles to home ownership.
- Helps with documentation you’ll need and other requirements in advance.
- Real estate agents have a network of professionals, including lenders, inspectors, and appraisers, who can help move the process along
- They can also help you negotiate the best price for the property and ensure that all the necessary paperwork is in order.
What to Expect on Closing Day
Closing day is the day when you take possession of your new home. On this day, you will sign all the necessary paperwork, including the mortgage documents and the deed. You will also pay your closing costs and any other fees associated with purchasing the property. Finally, you will receive the keys to your new home.
Closing a home should be pretty straightforward with the proper preparation and guidance. You can use the tips here to speed up the home-buying process and make your dream of homeownership a reality.
Better yet, learn everything you need to know to buy your first home confidently and quickly, which this Ultimate Home Buying Guide will give you, and get practical advice from top realtors, toolkits, and more!