How Long Does It Take to Close a Mortgage?

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How Long Does It Take to Close a Mortgage?

You finally have a contract in place after months of seeking and having numerous proposals rejected, so you can start paying your family members to come assist you relocate. Congrats! What day do you reserve the vehicle for, though? More often than you may imagine, different mortgages take different amounts of time to close.

Key Takeaways

  • Ask your lender and your real estate agent to provide you with an estimated closing date.
  • Lock your rate as soon as you can, and go back to your lender as soon as they ask you for any information or documents.
  • Conventional loans typically close in 57 days.
  • In general, it takes 62 days for more complicated mortgages like Federal Housing Administration (FHA) loans to close.

Closing Time Lines by Mortgage Type

The most typical kind of mortgages are conventional mortgages. According to ICE Mortgage Technology, the most latest data available, they close in an average of 57 days in 2021. (formerly Ellie Mae, the mortgage applications processor).

Because more paperwork is needed for Federal Housing Administration (FHA) loans, the closing process takes a little longer. They close in an average of 62 days.

Loans from the U.S. Department of Veterans Affairs (VA) have the most stringent underwriting standards and may only be obtained from lenders who have been authorized by the VA. They thus take the longest—66 days on average—to close.

Steps of the Closing Process

There are a number of processes involved in the closing process once your offer is approved. By deciding in advance on your lender, loan type, and house inspection, you may save a lot of time at the closing. Before you ever get into a contract, you should also be pre-approved with your selected lender and have all of your paperwork in order. Note: Depending on your lender, you may be able to complete some of the following stages in a different sequence.

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  1. Plan your home inspection as soon as possible. Home inspection appointments may need to be made weeks in advance depending on your region.
  2. Allow your lender to do a rigorous credit pull.
  3. Set a rate lock. It might be challenging to determine whether to lock your mortgage rate, but act fast to ensure that your loan closes on schedule.
  4. Request from your lender a prompt scheduling of your assessment. Appraisers usually have many weeks of availability.
  5. Provide your lender with documents. Depending on your specific circumstances, you may need to provide bank records, pay stubs, two years’ worth of tax returns, a picture ID, and your Social Security card.
  6. The property inspection has finished. Work out any problems you find with the seller so that you and your lender are both satisfied.
  7. The evaluation has finished. You will need to make up the difference, get other financing, or bargain the seller down if there is a mismatch between the assessed price and the selling amount.
  8. If your lender asks you a question or wants further information, get back to them as soon as you can.
  9. Get your closing disclosure and read it. A closing disclosure must be sent to you by your lender at least three working days before the closing, as required by law.
  10. Close on your new home!

Closing Guarantee

Chase is one of the several lenders that has begun providing a closing guarantee. Each offer’s conditions are different, but most promise to reimburse you a certain sum if they can’t timely settle your loan.

How can I speed up the closing process?

The easiest approach for you to expedite the closing process is to provide everything your lender requests as soon as you can. You should submit the lender every page of your bank statements, even the blank ones, if they need them. The best thing you can do to hasten your closing process is to cooperate as fast as you can with the paperwork requirements for a mortgage, which might sometimes seem onerous.

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What can delay the closing process?

Delays in closings are sometimes caused by significant changes to your creditworthiness, such as applying for a new line of credit or changing employment. Wait a few weeks for closing if you want to be able to purchase your home, even if you urgently need a new auto loan to replace a damaged car or if you just can’t take your job any more. Other frequent problems that might postpone closing include switching lenders, a lack of qualified local appraisers, problems that surface during the inspection that need to be remedied, and a delay in locking in your mortgage rate.

What happens if I don’t close on time?

Depending on the terms of your contract, the property seller may terminate the deal and maybe sue you for performance if you don’t close on time. Current is particularly probable if the seller has stronger backup offers or depends on the timely closure of this transaction in order to close on their next house. You would also forfeit your earnest money in this scenario. The parties will most likely agree to an addendum to the original contract that extends the deadlines if you are unable to close on time. Though it’s not assured, do your best to abide by the terms of your initial agreement since breaking them might cost you money.

Should I waive my inspection to close faster?

An inspection is often needed by your lender, and it is a requirement if you’re applying for a Federal Housing Administration (FHA) loan. You may choose not to have an inspection if it is not necessary in your case. Waiving your inspection can increase the likelihood that your real estate offer will be approved and might enable you to close on your loan more quickly—but at tremendous risk. The main danger of skipping an inspection is that it might reveal that the house you’re purchasing requires expensive and significant repairs. Consider the hazards if you decide to forego your examination.

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The Bottom Line

The kind of loan you choose and the availability of appraisers and house inspectors in your region will have a significant impact on the length of time it takes for your mortgage to complete. Keep things going by promptly and correctly addressing all of your lender’s requirements. While you wait, be careful not to make any significant changes to your financial circumstances. Greetings, house owner!

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