How Long Does It Take to Close on a House?

The closing timeline for real estate transactions depends on several factors, including the type of property, whether or not there is a mortgage, and the type of loans. The average time it takes to close on a house—between the seller accepting an offer and the buyer receiving the keys—is between 45 and 60 days. If buyers purchase the house with cash and waive common contingencies, such as a home inspection, the closing process could be as quick as seven days.

Many complications may contribute to closing delays, including issues with the inspection, appraisal figure, mortgage application, title, or final walkthrough. To speed the closing process, buyers can apply for a preapproval mortgage, prepare closing documents ahead of time, or request a rush on the appraisal. Consult your real estate attorney, lender representative, or closing agent about the bank statements and tax documents you will need to provide for the closing and for referrals of inspectors and other professionals to help complete the process.

In real estate, closing costs refer to the small fees that homebuyers incur when setting up or closing a new mortgage. The two most common occasions for closing costs are purchasing a new home or refinancing your loans. Closing costs usually include a combination of title fees, lender fees, property fees, and insurance fees.

Lenders are legally required to offer borrowers an estimate of mortgage closing costs, itemized in a loan estimate document or closing disclosure. While you can opt to pay each fee individually, borrowers often choose to pay closing costs as a simple one-time lump sum into an escrow account. From there, the escrow agent can distribute the correct amounts to each party.

When closing on a home, buyers need to maintain their credit score. Consider the following tips:

1. 1. Avoid opening new credit cards. Signing up for a credit card can affect your debt-to-income ratio. Buyers mustn't open new credit accounts or run up credit card debt.
2. 2. Do not switch jobs. Job history and the length of employment are crucial for securing a mortgage loan. Getting a new job during closing or a significant pay increase can affect the loan validation process.
3. 3. Hold off on big purchases. It is best to wait until the mortgage finalizes before buying items such as furniture and appliances for your new home. Big-ticket items, particularly transactions with payment installments, can lower your credit score.

Once a property seller likes an offer from a buyer, the closing process begins. Here’s a step-by-step guide to closing, from accepting the offer to moving in:

1. 1. The seller accepts the offer. Once a seller accepts a buyer’s offer on a home, they can start the contract of sale, which details the price, any contingency requirements, how long the seller has before they need to move out, and the official closing date. The buyer will need to ensure they have enough money in their bank account to put down an earnest money deposit (a sum that shows they’re committed to buying), which will go toward their down payment. The buyer may be required to place their earned money deposit into an escrow account until the seller and buyer close the deal. (Escrow protects the buyer’s deposit and ensures the seller receives it once the deal is officially closed. The mortgage servicer usually manages this account or another viable third party.)
2. 2. The buyer organizes a home inspection. After entering into a purchase contract, homebuyers typically hire a certified independent inspector to conduct a full inspection of the house. Buyers typically have five business days to complete the inspection process. The home inspector will do a full walkthrough of the property and identify any defaults or concerns you and your realtor may have missed. It’s normal for inspectors to find small things—like peeling paint—but keep an eye out for more expensive structural defects like roof damage, bad siding, or foundation shifting, which can significantly affect renovation costs or devalue the property. If any surprises arise during the home inspection, the buyer and seller may negotiate a different sale price or add additional repairs to the contract.
3. 3. The buyer submits their mortgage application. After the home purchase price is official, the buyer can submit their mortgage application to their lender. The lender will begin the underwriting process, reviewing the application documents, assessing the borrower’s finances (for instance, pulling a credit report and checking their credit score and tax returns), and schedule an appraisal of the property. Once the lender approves the home loan application, they give the buyer a “good faith estimate,” or a written overview of every detail of the mortgage process, including the mortgage loan type, the monthly payments, the interest rates, the estimated closing costs, and when and how they’re expected to pay.
4. 4. The lender conducts an appraisal. The mortgage lender will schedule an appraiser to visit the property and assess its size, location, condition, and added elements of value to determine a fair market value for the house. The home appraisal may take anywhere from 20 minutes to two hours and will result in a full appraisal report and an official estimate of the property’s value. If the number is significantly different from the agreed-upon purchase price, the buyer and seller may renegotiate the sale contract.
5. 5. The buyer finalizes their loan. After the appraisal and contract details are completed, the mortgage lender will review the buyer’s mortgage application and approve or deny it. During this time, the buyer locks in their interest rate and mortgage payments, ensuring that their quoted mortgage rate won’t change as they finish closing on the house. The loan officer details the finalized mortgage in a closing disclosure, including a final cost breakdown like the loan estimate.
6. 6. The lender conducts a title search. The underwriter will search for the home’s title (often through a title company) to ensure there aren’t any encumbrances, liens, judgments, or bankruptcies. If title issues arise during the search, the closing process can take much longer to complete; many home buyers opt to take out title insurance before the search to protect themselves from lengthy title disputes.
7. 7. The seller moves out. Near the end of the closing process, the seller completely moves out of the property, removing all of their private property from the home and usually cleaning it for the new occupants.
8. 8. The buyer sets up homeowners’ insurance. Before the buyer can officially own the property, they must apply for and secure a homeowners’ insurance policy to protect themselves against loss, theft, or damage to the property or furnishings.
9. 9. The buyer conducts a final walkthrough. The buyer and the real estate agent will do a final walk-through, typically 24 hours before closing. During the walkthrough, the buyer takes a final look at their prospective new property to confirm that it is in the condition in which they agreed to buy it. If any problems arise in the final walk-through, the seller can address them promptly. Sellers can usually address minor concerns like changing light bulbs or fixing door hinges within a few days. If there’s a more significant concern, like an inadequate repair to an existing problem, the buyer can delay closing and hold some of the funds in escrow until the repairs are completed. If the seller does not complete the repairs, the buyer can walk away from the home sale.
10. 10. The buyer closes on the property. Once the seller completes any requested repairs and the buyer signs off on them, the buyer can close on the house under the oversight of a closing agent. Commonly called “closing day” or “closing time,” the buyer and seller will sign many closing documents as the final step of the process, including the deed of trust and the promissory note, which will officially transfer the title and ownership of the property to the buyer. The buyer will also bring a cashier’s check for the difference between their loan and the final purchase price. During this step, the buyer finally receives the keys for their new home and may officially move in.

All investments, including real estate investments, come with inherent risks which may involve the depreciation of assets, financial losses, or legal ramifications. The information in this article is for educational, informational, and referential purposes only. Consult a licensed real estate or financial professional before making any legal or financial commitments.

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