After months of searching and having several offers rejected, you’re finally under contract and can start bribing your relatives to come help you move. Congrats! But what day do you book the truck for? The time line that it takes your individual mortgage to close varies more than you might think.
- Ask both your lender and your real estate agent for an estimate of the closing time line.
- Lock your rate quickly and respond to every question and documentation request from your lender as quickly as possible.
- Conventional mortgages close in an average of 57 days.
- More complex mortgages, such as Federal Housing Administration (FHA) loans, close in an average of 62 days.
Closing Time Lines by Mortgage Type
Conventional mortgages are the most common type of mortgage. They 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 applications processor).
Federal Housing Administration (FHA) loans take a bit longer to close due to additional documentation requirements. They take an average of 62 days to close.
U.S. Department of Veterans Affairs (VA) loans have the most complex underwriting requirements and are only available through VA-approved lenders. As a result, they take the longest time to close—an average of 66 days.
Steps of the Closing Process
Once your offer is accepted, there are still several steps to your closing process. You can save a lot of time during closing by choosing your lender, your loan type, and your home inspector in advance. You also will want to get pre-approved with your preferred lender and have all of your documents in order before you ever go under contract. Note: Some of the following steps can be completed out of order or done out of order depending on your lender.
- Schedule your home inspection right away. Depending on your area, home inspectors may be in high demand and scheduling several weeks out.
- Authorize a hard credit pull with your lender.
- Lock your rate. Deciding when to lock your mortgage rate can be difficult, but decide it quickly so that your loan can close on time.
- Have your lender schedule your appraisal right away. Appraisers are frequently booked out several weeks.
- Provide 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, a photo ID, and your Social Security card.
- The home inspection is completed. Negotiate any issues that are found with the seller to your satisfaction and your lender’s.
- The appraisal is completed. If there is a discrepancy between the appraised amount and the sale amount, you’ll have to cover the difference, secure alternate financing, or negotiate the seller down.
- Respond to any of your lender’s questions or requests for additional information as quickly as possible.
- Receive and review your closing disclosure. By law, your lender is required to give you a closing disclosure at least three business days before you close.
- Close on your new home!
Many lenders, including Chase, have started offering a closing guarantee. The terms of each offering vary, but most agree to pay you a set amount if they can’t close on your loan on time.
How can I speed up the closing process?
The best way for you to speed up the closing process is by providing as quickly as possible exactly what your lender asks for. If your lender needs every single page of your bank statements, including the blank ones, send them every single page of your bank statements. The documentation requirements for a mortgage often seem tedious, but cooperating as quickly as possible is the single greatest thing that you can do to speed up your closing process.
What can delay the closing process?
Major changes to your creditworthiness, such as applying for a new line of credit or switching jobs, are notorious ways for a closing to be delayed. Even if you desperately need a new auto loan to replace a totaled vehicle, or if you just can’t stand your boss anymore, wait a few weeks for closing if you want to be able to buy your house. Other common issues that can delay closing are changing your lender, limited availability of local appraisers, issues coming up in inspection that must be resolved, and delaying locking your mortgage rate.
What happens if I don’t close on time?
If you don’t close on time, the property seller could cancel the transaction and potentially sue you for performance depending on the terms of your contract. This is more likely if the seller has received better backup offers or is depending on this sale closing on time so that they can close on their next home. In this case, you also would lose your earnest money. If you’re unable to close on time, then the parties most frequently will agree to an amendment to the original contract that extends the deadlines. This isn’t guaranteed, though, so do your best to stick to your original contract, because it can be expensive if you fail to close on time.
Should I waive my inspection to close faster?
Your lender will usually require an inspection—and if you’re getting a Federal Housing Administration (FHA) loan, it’s required. If an inspection isn’t required in your situation, you do have the option to waive it. Waiving your inspection could make your real estate offer more likely to be accepted and could allow you to close on your loan faster—but at great risk. The biggest risk to waiving an inspection is that the home that you’re buying needs major and costly repairs that could have been discovered in the inspection. If you do choose to waive your inspection, be sure to consider the risks.
The Bottom Line
How long your mortgage takes to close depends greatly on the type of loan that you choose and scheduling time lines of appraisers and home inspectors in your area. Respond to all of your lender’s requests as quickly and accurately as possible to keep things moving. Make sure that you don’t make any drastic changes to your financial situation while you’re waiting. Congratulations, homeowner!