With careful organization and clear communication among the buyer, seller and lender, you can speed up the time it takes to close on a home. This can potentially save you and the seller both money and prevent unnecessary anxiety.
“In some cases, you can close earlier if you are willing to pay for a rush appraisal or if you work with your loan originator to be fully preapproved prior to executing your real estate contract,” Tolbert adds.
However, some mortgage lenders promise speedy closing timelines, as fast as seven to 10 days in some cases. The fastest closing timelines are typically when the buyer pays cash and can skip the appraisal process. Your best bet? Budget for a 45-day closing process, from accepted offer to closing day.
It is technically possible to close on a home in 30 days, or even less, particularly if you are paying all-cash rather than getting a mortgage or dealing with a homebuying company or iBuyer. But in general, according to data from ICE Mortgage Technology it takes about 44 days to close on a home.
Timing Requirements – The “3/7/3 Rule”
The initial Truth in Lending Statement must be delivered to the consumer within 3 business days of the receipt of the loan application by the lender. The TILA statement is presumed to be delivered to the consumer 3 business days after it is mailed.
More often than not, purchase contracts will state that the sale will close on or before a specific date unless both parties mutually agree to a change, but some contracts don't allow the buyer or seller to change the closing date.
As little as two weeks. Nearly one-third of homes in the U.S. are bought with all cash. If a buyer has the cash available and provides proof of the funds, buying a house with an all-cash offer can happen in as little as two weeks.
Title report issues are the most common reason for closing delays. Some sellers are completely unaware that there were previous liens on their property and buyers face the frustration of waiting out these sometimes complicated resolutions.
VA loans tend to take longer to close than conventional loans. This is due to the stricter underwriting requirements for VA loans and the fact that not all lenders underwrite VA loans in-house.
Sort your paperwork to speed things up
Ask for these a few weeks in advance in case you need to wait for the originals to arrive. Your lender may want to see any or all of: Your last three months' bank statements. Your last three months' payslips.
There could be title issues that even the seller is unaware of, and this can precipitate legal complications that inevitably delay a closing. Title issues can include liens on the property or unpaid property taxes. There could be unresolved disputes over who owns or inherited the property.
Cleared to Close: After satisfying all conditions and receiving final approval, you reach the "cleared to close" stage, which usually takes around three days. Closing and Funding: The closing and funding process typically takes about one day.
If something comes up in that time that leads one or both parties to want to reschedule the closing, that can be done, but it requires coordination and agreement from all parties involved.
Use pre-approval to speed up closing time
Home buyers with a mortgage pre-approval in-hand when they make an offer will be signing final paperwork sooner. Often, a pre-approval can speed up closing by a week or more. This is possible because of the role which a pre-approval plays to a lender.
It takes between one and two days to move house on average. You will usually move in on the day of completion unless your contract states a later date. The completion day will have been agreed on beforehand, so you can book your removal company in advance.
The process of applying for and closing on a mortgage contains several different steps and typically takes anywhere from 30 to 45 days. Your closing can get delayed if there are issues with the appraisal, inspection, title or financing.
Closing early in the month will result in an additional month in which you do not have to make a mortgage payment. However, you're paying mortgage interest during this time, and the amount you will owe in total for your mortgage will be the same as if you had closed later in the month.
While changing the closing date of a real estate transaction is possible and often necessary, it requires careful coordination and communication between all parties. Understanding the reasons for the delay, acting promptly, and getting agreement in writing are key to a smooth transaction.
In most contracts, both parties must agree to any extension unless the contract specifies that one party has the right to extend unilaterally under certain conditions. The contract may specify penalties for failing to close on time or remedies if the other party is at fault for the delay.
When the Know Before You Owe mortgage disclosure rule becomes effective, lenders must give you new, easier-to-use disclosures about your loan three business days before closing. This gives you time to review the terms of the deal before you get to the closing table.
A good way to remember the documentation you'll need is to remember the 2-2-2 rule: 2 years of W-2s. 2 years of tax returns (federal and state) Your two most recent pay stubs.
Capacity, Credit, and Collateral
The three C's of underwriting play an essential role in the underwriting process. Regarding Capacity, your debt-to-income ratio is the most important component. Ideally, you would like your DTI ratio to be at or below 40%. There are home loan programs that allow up to a 50% DTI ratio.