When the closing is delayed, it might force sellers to make last-minute adjustments to their plans. Adding to the financial strain, closing delays mean the seller continues to incur holding costs on the property. This includes ongoing mortgage payments, property taxes, and maintenance expenses.
“If all of the buyer's legitimate deadlines have expired and the buyer is considered to be in default of the contract, the seller can elect to keep the earnest money as liquidated damages and agree to cancel the contract,” says Horner. “Or, the seller can elect to sue.”
It is important to note that while average closing times might be 47 days for a purchase and 35 days for a refinance, most loans will actually take between 30 days and 75 days to close.
It's a prudent move to examine your loan agreement and purchase contract to determine whether provisions for extensions are in place. In most cases, many purchase contracts allow for a one-time extension of the closing date, offering flexibility to adapt to unforeseen circumstances.
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.
Compensation for delayed closings is usually based on actual losses or damages sustained by the aggrieved person in the event of a delay. The damages could be: Additional living expenses like hotel re,nt or storage costs. Other mortgage or interest payments.
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.
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.
You can back out of buying a house any time before closing. However, you'll likely face penalties — including possibly being sued — if the purchase agreement has already been signed and you're backing out for a reason that isn't listed as a contingency in the purchase agreement.
When a buyer cannot or does not complete an agreement without cause the buyer will be responsible for making the seller “whole”. This means that the seller is entitled to be put in the same position as the seller would have been had the buyer completed the transaction as scheduled.
To avoid any financing roadblocks or a delayed closing, ensure that there are no major changes with your financial situation from the time you've submitted your loan application to the day of closing, such as buying a new car. With that said, it's recommended to work with a knowledgeable, local mortgage broker.
A mortgage contingency usually provides 30 to 60 days for buyers to secure loan approvals — which means that if buyers don't obtain financing within that period, they risk losing their earnest money deposits, and sellers are legally allowed to cancel the contract.
If the buyer absolutely cannot come up with the cash to close, they may lose their deposit and the seller can put the home back on the market. Having insufficient funds at closing could cause the buyer to default on the purchase agreement.
The closing date is set after your mortgage loan has been approved and you accept the commitment letter. Your agent will coordinate this date with you, the seller, your lender, and the closing agent.
Closing on a house takes roughly 30 to 60 days from the time your offer is accepted to taking ownership of the house.
Some buyers may be able to negotiate an immediate possession date. This means as soon as the transaction is closed and the deed is recorded, the buyer can move in. A few other common buyer possession dates may be 15 days, 30 days, 60 days, or even 90 days after closing, depending on how much time the seller needs.
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.
The average time to close varies based on loan type and the state of the housing market, but the variation is relatively small. Closing in 30 days is ideal, but it's usually only possible if the buyer's financial readiness isn't a barrier and no issues arise during the appraisal and inspection.
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.
The Rule of 28 – Your monthly mortgage payment should not exceed 28% of your gross monthly income. This is often considered the “Golden Rule,” and many lenders abide by it.
A mortgage servicer may not make a first notice or filing for foreclosure until the borrower is more than 120 days delinquent. The 120-day period under the rules is designed to give borrowers time to learn about workout options and file an application for mortgage assistance.
When you miss a closing date as a buyer, technically you are in breach of contract and the seller could take legal action against you including your being mandated to reimburse them for mortgage, taxes, insurance, or other costs they may have incurred because of the delayed closing.
Can you sue a loan officer if a deal fails to close on time and the seller refuses an extension? You can, but whether a judge would even hear your case is another matter.
The lender may also offer to give you a credit to help with your closing costs. This credit isn't free either. Typically, the lender will either increase your loan amount to cover these costs, or charge you a higher interest rate in exchange for the credit.