House Closing Process: The 12 Steps of Closing
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Amy also has extensive experience editing academic papers and articles by professional economists, including eight years as the production manager of an economics journal. Once your offer has been accepted and you go into contract on a new home purchase, it can still be a while before the house is actually yours. According to recent data from ICE Mortgage Technology, it takes an average of 44 days to close on a home.
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Your closing agent will ensure the other parties in the transaction, like your lender and the seller (if you’re buying a home), receive the signed documents they need. According to ICE Mortgage Technology, the average time to close a home purchase in May 2023 was 43 days. However, the closing process can range from a week to two months or longer. According to Zillow, factors that affect the timing include whether or not you’re buying the home with a mortgage, the kind of mortgage, and the type of property you’re buying. The buyer will sign the brunt of the paperwork, especially if they are securing a mortgage.
Steps of the Closing Process
This is more likely if the seller has received better backup offers or is depending on this sale to close on time so that they can close on their next home. Closing costs vary and are often estimated at 2% to 5% of the home's sale price. Note that the seller usually pays the real estate agent’s commission. Each step from here on out will be scheduled based on that date, the final deadline on your home sale (which can be renegotiated in the event of delays or surprises). Once the purchase agreement has been signed, closing on a house can take an average of 50 days when a buyer is using a mortgage as of February 2023, and as little as 1 week for all cash purchases.
How Long Does It Take to Move Into a House After Closing?
With any home purchase, there is always the potential for roadblocks to delay or derail the path to closing. According to the National Association of Realtors, 24% of closings get delayed but eventually go to settlement — only 7% of contracts die before the deal closes. For an all-cash deal, Donaldson says the closing itself can be finished in 30 minutes.
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You should also avoid doing anything that could negatively affect your cash flow and credit score. The buyer's or seller's real estate agent usually opens an escrow account early in the closing process. The account holds your earnest money deposit and other important items throughout the closing (or "escrow") process. A neutral third-party escrow agent (sometimes called a title agent) holds the assets and eventually transfers them to the appropriate parties when all the conditions in the agreement are met, generally at closing.
If any of these real estate terms are a little fuzzy, talk to your agent. Closing is the final step before that house is finally freakin’ yours! Your closing date is the day you become the legal owner of your new home. It wasn’t easy to land a deal on your dream home in this hot market.
In closing…
Sweeten has found that the cost of a retrofit for a 2,000-square-foot house will likely come in between $10,000 and $15,000. Whether there is any damage or rot to the existing framing as well as the cost of materials and labor will impact that figure, according to Sweeten. Taking the initiative to do a seismic retrofit is highly recommended because it can add value to your home, but it is not mandatory.
We decrypt the jargon, explain what will be required of you and offer tips for standing out in the crowd of buyers. Any lenders who get repaid from the transaction must file a mortgage lien release or satisfaction of mortgage document with the county recorder. Don't forget homeowner's insurance, which most lenders require as a condition of your loan. Be sure to get quotes in writing from several companies to compare the cost and coverage amounts. They are made through private lenders, such as banks and credit unions, and they usually require a higher credit score to qualify than a government-backed loan does. Average closing timelines for mortgages on the purchase of a home tend to rise and fall from month to month.
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You'll make sure the previous owners have moved out and made any repairs they agreed to. You'll also confirm the home is in the same (or better) condition than when you agreed to buy it. Once you’ve made the decision to buy a house, a lengthy process begins. For starters, buyers who need financing must go through the mortgage process, including underwriting and a home appraisal. Home buyers also use this "due diligence period" to get a home inspection, have the property surveyed, review the homeowners association (HOA) covenants and restrictions, and research the title.
If possible, request a dry closing to schedule the transfer of funds after your paperwork is signed and completed. A dry closing may help you avoid additional delays caused by an inexperienced lender. You’ll need to get the seller’s permission first to use this strategy. Appraisals help ensure that you pay what your new house is actually worth.
Selling the home you buy costs money, and if you haven’t built enough equity — either through mortgage payments or rising real estate values — you may have to sell at a loss, or might not be able to sell at all. You’ll need a notary signing agent present to witness your signature and verify your identity. If your lender offers it, and your state allows it, you may be able to do a fully digital closing with remote online notarization (RON). California, Georgia and Connecticut don’t allow this type of notarization as of June 2023. Mississippi and Massachusetts are temporarily allowing RONs, while South Carolina doesn’t have laws in place to address them. If you have any questions or concerns, take them to your loan officer right away so they can explain or correct your initial closing disclosure.
One of the most common issues is the home appraisal — specifically, whether the home appraises for the full purchase price (or more). Lenders want to make sure the home is worth enough to secure the mortgage. If it appraises for less than the amount of the loan, the buyer might have to pay extra to bridge the gap. An all-cash deal, by comparison, speeds things up considerably because there is no need to wait on financing. And if you’re really pressed for time, you might be able to close on a cash deal with a homebuying company in just days.
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