If you are not being mindful, the home closing process can be longer than you plan for but there are ways to avoid delays. For instance, right after a purchase offer is accepted, the subsequent question home buyers want to ask is "how long will it take for the home to close." Unless the buyers are paying all cash for the home, it is the buyer's lender who will determine the length of time required to process the loan and close.
This means the lender has an important role that can't be overlooked.
A buyer and seller may agree to an early closing date in the purchase contract, however, if the lender can not execute during that time frame, it does not matter much which date is used, because it is not going to close on the date the buyer and seller selected. It will close whenever the lender is ready. Also, not every lender treasures are as efficient as others.
The Escrow Closing Process
Depending on what area you are purchasing a home, a number of entities could manage the closing process. We can talk about a few. The closing agent could be an escrow officer, a closer, the title company or a real estate lawyer.
Closing processes can vary widely even within the same state. In California, for example, the escrow process is different in northern California versus southern California. The primary difference between the two is escrow instructions are drawn and signed on the front end (shortly after offer acceptance) in southern Cal and on the back end (just before closing) in northern Cal.
In California, for example, the escrow process is different in northern California versus Southern California. The primary difference between the two is escrow instructions are drawn and signed on the front end (shortly after offer acceptance) in southern Cal and on the back end (just before closing) in northern Cal.
Before any escrow can close, however, all the terms of the purchase contract must be met; then the seller deposits the deed and the buyer deposits the funds. Here are sample types of conditions required in California. Your state closing process may vary.
Fully executed purchase agreement and addendums.
Deposit of earnest money deposit.
Home inspection or waiver.
Completion of seller responsibilities such as submitting pest inspection report and/or completion, roof certification, home warranty, preliminary title policy, beneficiary demand receipt, repairs, if any, according to the Request for Repairs.
Completing buyer inspections, including the release of contingencies, if demanded.
Buyer's final walk-through inspection or waiver.
Appraisal of property by lender's appraiser.
Lender's loan approval and satisfaction of loan conditions by buyer such as depositing evidence of a homeowner insurance policy.
Seller's and Buyer's signed escrow instructions.
Seller's signed and the notarized deed conveying title.
Buyer's signed and notarized deed of trust and executed a promissory note.
Buyer's signatures on all loan documents.
Deposit of buyer's funds from the lender.
Deposit of balance of buyer's down payment and buyer's closing costs.
How Long Does a Home Closing Take?
Buyers who have received loan preapproval versus loan pre-qualification are often in a position to close sooner. The pre-approval process involves verification of certain items up front, before signing the purchase contract, moving the borrower a few steps closer to closing.
If a lender has verified the borrower's employment, bank accounts, and credit report, closing can take place as quickly as underwriters can process the paperwork and review the appraisal, generally within a week or two. However, if a document is missing from the file such as a preliminary title report or a seller's condition of sale, the closing may be delayed.
Most federally related mortgage loans can close within 30 days. First-time homebuyer programs, in particular, those including help for the buyer's down payment, can take 35 to 45 days to close. These particular loans generally require consent from two underwriting processes.
However, complying with TRID guidelines can sometimes slow down the process because the entities that are working together have no pre-existing relationship.
Home Closing Delays
The biggest hurdles often happen after the document is submitted to the underwriter. Loan officers are generally familiar with underwriting guidelines; however, they can't always predict an underwriter's response. Each underwriter is unique.
Nothing is worse for buyers than waiting around with boxes containing every valuable item they own, waiting for movers and not knowing if their loan will be approved by an underwriter. The last days of closing can be very long
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Here are common problems that can delay or prevent closing, many of which, it pains me to say, should have been addressed prior to submission to an underwriter, but sometimes the ball gets dropped:
Low appraisal or the underwriter orders a review appraisal that does not match the first appraisal.
Additional debt found on the buyer's updated credit report.
Mistakes noted in the buyer's credit report.
New liens or judgments filed against the buyer or seller upon title update.
Clouds on the title.
Marital status change for buyer or seller.
Required updated bank statements or financial documents.
Insurance information missing.
Expired loan or program commitment.
If the purchase contract does not contain a provision that makes closing contingent upon loan approval, the buyer's earnest money deposit could be at risk if the loan is not approved and the transaction does not close.
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