Posted 11/16/2017

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How long does it take to close on a house?

Manage your mortgage closing to get access to lower mortgage rates

Gina Pogol

The Mortgage Reports Contributor

How long does it take to close on a house?

According to loan software company Ellie Mae, it took 44 days to close a home purchase loan as of October 2017.

This is the amount of time it takes from application to "loan funding" — which is when the home is officially yours.

If you have not yet applied, or you have not found a home to buy, your closing time frame will be longer.

Also, the type of loan you get can make a difference. Ellie Mae breaks out average closing times by loan type:

  • Conventional loans: 43 days
  • FHA loans: 46 days
  • VA loans: 46 days

Keep in mind, though, that closing times vary wildly depending on the situation. A cash buyer, for instance, can close in a matter of days. A mortgage user with questionable credit and income can take 60-90 days or longer.

If you're trying to close on a home fast, apply with your lender as soon as possible — even before you find a home.

Verify your mortgage eligibility (Nov 19th, 2017)

How long a home closing takes if you haven't found a house yet

Closing on a house takes time. And, it depends on your "starting point."

If you are yet to find a home, that process alone could take 30-60 days or more, depending on competition in your area.

Once you find the house, it could take 1-5 days to make an offer, have the seller look at your offer, negotiate, and come to an agreement on price and other aspects of the transaction.

At this point, you can make full application for the home loan. The reason is that a lender can't issue you a full approval without a property.

You can speed up the process by getting pre-approved for the mortgage as soon as you start seriously looking at homes. Don't let that 30-60 days go to waste.

A pre-approval is when the lender gives a thumbs-up to all aspects of your home loan besides the property. Once you have an accepted offer, your lender already has a serious head start on your final approval.

If you have found a house to buy: How long does it take to close?

If you've found a home already, it will probably take between 40 and 50 days to close the home mortgage, based on national averages.

Keep in mind that your situation can vary widely depending on your situation. Speed things up by preparing for the seven steps of underwriting described below.

In today's market, the appraisal report can be a major sticking point. Due to regulation, many appraisers left the business after the housing downturn in the late 2000s. Today, home buyers are paying for it.

Appraisers are few and far between, but demand is through the roof. Ask your lender about current appraisal turn times based on recent history.

Be careful not to overpromise closing speed to your seller. Your purchase agreement will state a closing date. You are expected to stick to it, or potentially lose the house and your earnest money.

Above all, have an honest conversation with your loan officer about how long he or she believes it will take you to close. Ask for a realistic or even pessimistic assessment, factoring in underwriting, processing, the appraisal, condition review, and closing/funding.

It's better to guess "long" than to have overly optimistic time frames you can't reasonably hit.

Verify your mortgage eligibility (Nov 19th, 2017)

How long after the appraisal to close?

If your appraisal is complete, congratulations. That's one of the longest steps in the mortgage process.

You might be wondering how much longer you have.

Typically, a lender will be working on your approval while the appraisal is complete. So when the appraisal comes in, the lender should be more or less ready to go.

It shouldn't take longer than 2 weeks to close after the appraisal is done.

That's not a promise, though. There are still plenty of potential hang-ups. Your lender could find an issue on the appraisal (peeling paint, a roof in need of repair, etc.) that needs to be addressed. The seller might have a problem on the home he or she is purchasing, delaying the sale.

But don't let those items worry you. They happen frequently and are usually resolved in one way or another. Still, be vigilant with your lender. Make sure it is speeding your file through the rest of the process.

How long does it take to get a mortgage?

Each month, mortgage software provider Ellie Mae publishes its Origination Insight Report, a series of mortgage-related statistics culled from the company's processing of more than 3.7 million mortgage applications nationwide.

It now takes an average of 43 days to close on a home loan, averaging purchase and refinance transactions.

That's down from 51 days at the beginning of 2017.

Still, it takes longer than most consumers think to close a loan. That means that home buyers and refinancing households should plan for longer mortgage rate locks than they initially expect.

Remember: Mortgage rate locks move in 15-day increments and, today, it now takes an average of about forty-five days to close on a home loan.

There are a number of reasons why loans take longer than 30 days:

  • Mortgage lenders have been trimming staff in expectation of rising rates
  • A home-buying frenzy is sparking a wave of purchase applicants to buy
  • Rising rents, too, are lighting a fire under home buyers

All of this is creating a crush on mortgage lenders who are, frankly, unprepared to handle this year's workload.

Despite technological improvements, banks just can't keep up with demand.

However, there's another reason why loans are taking longer to close -- the the TILA-RESPA Integrated Disclosure laws, which went into effect toward the end of 2015.

The gist of TRID is that mortgage lenders must send particular paperwork to mortgage borrowers 72 hours prior to closing, and that changes to any of the documents require a re-disclosure of said terms and another 72-hour waiting period.

Since October 2015, then, closings have had an additional 3 days tacked on; a government-mandated delay affecting all closed loans.

You'll want to check with your lender when choosing the length of your rate lock. Shorter locks are ideal, but not always available to you.

Verify your mortgage eligibility (Nov 19th, 2017)

A word about closing times and rate locks

When you finance a home using a mortgage, your interest rate is based on time-to-close -- the fewer days it takes to get you from "rate lock" to "closing", the lower your mortgage rate will be.

This is true for purchase mortgages and for refinance loans, too.

For every 15 additional days it takes to close your loan, in general, your quoted mortgage rate increases by 12.5 basis points (0.125%).

However, you don't get the liberty of choosing the shortest possible mortgage rate lock, then extending 15 days at a time, as needed. At the beginning of the mortgage approval process, mortgage lenders require borrowers to state for how long they'd like to lock their loan.

The typical mortgage rate locks last for 30 days, 45 days, or 60 days with extended mortgage rate locks available, upon request.

Ideally, borrowers should elect the shortest rate lock period that allows the lender to complete the loan process; and, for the purchase of a home, that extends through the home's closing date.

Verify your mortgage eligibility (Nov 19th, 2017)

Speed your mortgage through 7 steps of underwriting

When your mortgage loan is submitted for approval to a bank, there are roughly seven separate steps as part of the process. What follows is a brief explanation of each, and what you might be able to do to speed your loan along.

Note: For best results, the first three steps can -- and should -- be completed prior to shopping for a home.

Step 1: The initial mortgage application

When you give a mortgage application to your lender, it's either completed in-person, by telephone, online, or via an app.

Completing a mortgage application, if you're prepared, will take 20 minutes to an hour.

"Prepared" means having your employment and address information for the most recent two years at the ready, and having handy your employer's and landlord's contact information; your bank, retirement, and investment account statements; and, proof of your income, which may be via pay stubs or tax returns.

In many cases, after taking your application, a lender will be able to offer a "preliminary approval", which means that your loan is conditionally-approved, assuming that you can prove the information provided above with supporting paperwork and documentation.

Step 2: Provide supporting paperwork & documentation

After your preliminary approval is issued, your mortgage lender will ask you to provide paperwork which proves the information you've shared as part of your application.

Typically, this paperwork includes pay stubs, W-2 statements, federal tax returns, and account statements for your savings and retirement accounts. Other documentation requests may include copies of business licenses, gift letters for down payments, and proof that a student loan is in deferment.

After reviewing the paperwork, your mortgage lender may ask for additional supporting information, which may include written explanations for "large, atypical deposits" in your bank account or anything else.

Reviewing your loan paperwork is a task which is typically completed within two days, but can sometimes take as long as a week.

In general, the faster your comply with your lender's request for paperwork and supporting documentation, the faster your file will be attended to.

Step 3: The credit approval letter (for purchases only)

Once the lender has reviewed and "signed off" on your paperwork, it will issue a pre-approval letter to you.

A pre-approval letter is your proof that your loan can be approved, so long as the property you purchase meets lender guidelines, and so long as you don’t make any "material" changes to your application.

Material changes include a change of employment, of income, in credit, marital status, and down payment.

Changes in your application do not nullify your approval -- they only require that your loan get re-underwritten and re-approved.

Verify your mortgage eligibility (Nov 19th, 2017)

Step 4: The home appraisal

As the next step in the mortgage approval process, your mortgage lender will schedule for the home to be appraised.

For home buyers, this step won't happen until after a home has been purchased and after the home inspection has been completed. For refinancing homeowners, appraisals are performed only when the loan is not an FHA Streamline Refinance or VA Streamline Refinance.

Appraisals can take up to a week to complete, depending on the uniqueness of the property. It can also take a week for an appraiser to actually show up.

Therefore, when it's time to schedule the appraisal, try to schedule it for as soon as you possibly can.

Every day counts when you're trying to preserve a rate lock, so if the appraiser wants to come see the home tomorrow morning, find a way to make that possible.

Step 5: The lender's review of the home appraisal

After the appraisal is completed, the lender will "double-check" it for validity.

In general, mortgage lenders' appraisal review process is lax -- the appraiser is the expert, after all. However, if the appraised value of the home is more than a few percentage points higher than the lender's expectation for what that value should be, the lender may ask to commission a second, verifying appraisal.

Scheduling this second home appraisal can add another week to your closing, which can increase your mortgage rate and closing costs. This is a rare occurrence, however

Most times, lenders will accept the appraiser's valuation of a home as-is, and will issue a "final approval" which states that the loan is approved subject to certain closing conditions.

As the borrower, your closing conditions may include finalizing your hazard insurance policy, depositing your down payment into an escrow account with the title company, and signing your final set of mortgage documents.

Step 6: The mortgage loan closing

After the lender has issued its final approval, the only thing left to do is to close on the mortgage. However, until the closing has completed, it's your duty as the borrower to not change anything which could affect your mortgage application.

For example, between your final approval and your closing, don't quit your job, don't buy a car, don't put furniture on layaway, and, most importantly, don't miss a payment to a creditor.

Any of these events could cause your approval to be revoked. Only after your loan is funded and money has changed hands can the loan be considered final.

Verify your mortgage eligibility (Nov 19th, 2017)

Step 7: The rescission period (for refinances only)

For refinance loans of a primary residence, the closing doesn't mark the end of the mortgage loan process -- there are another 3 business days during which the loan can be canceled.

These three days, known as the Rescission Period, are a borrower's right. They give the homeowner a chance to change their mind and cancel the loan entirely.

The 3-day Right to Cancel cannot be waived and must be figured into the mortgage rate lock period.

What are today's mortgage rates?

The faster you can close on a mortgage, the lower your mortgage interest rate can be. Know the steps in a mortgage approval, and where you cut time and corners to get to closing quicker.

Get today's live mortgage rates now. Your social security number is not required to get started, and all quotes come with access to your live mortgage credit scores.

Verify your mortgage eligibility (Nov 19th, 2017)

Gina Pogol

The Mortgage Reports Contributor

Gina Pogol writes about personal finance, credit, mortgages and real estate. She loves helping consumers understand complex and intimidating topics. She can be reached on Twitter at @GinaPogol.

The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.

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2017 Conforming, FHA, & VA Loan Limits

Mortgage loan limits for every U.S. county, as published by Fannie Mae & Freddie Mac, the Federal Housing Administration (FHA), and the Department of Veterans Affairs (VA)