The more organized you are, the quicker closing day comes.

You can almost hear the keys of your new home jingling in your hand. However, you will have to wait a bit before you unlock the door to your dream home. Fannie Mae reported that the average time it takes for buyers to close on their homes is 46 days and 49 days for a mortgage refinance. Read through the following paragraphs to learn more about why it takes so long to close on a property. 

What Does it Mean to Close on a House?

Closing on a property means the buyer takes ownership of a property. Closing on a property usually happens 4-8 weeks after an offer to buy the property is accepted. Certain loans like the first-time home buyer, VA and FHA do take longer to close on. They have stricter requirements to qualify for.

Escrow Timeline

The time period between when the buyer and the seller sign the contract and the day the buyer closes is called escrow.

A number of different things happen during the escrow process.

During this time the property is inspected, the mortgage application and underwriting is completed, the property is appraised and the home loan is approved.

What NOT to do Before Closing

  • Do not overspend your money. Only pay for necessities such as: gas, groceries, electric and household necessities. Put yourself on a budget if you need to. 
  • Do not make any major purchases. Your lender may require that you have cash-reserves left after you put a down payment on a property.
  • Do not open any new lines of credit, especially credit cards. A new credit card will change your debt ratio, which can affect your final loan approval.
  • Do not switch jobs unless it’s absolutely necessary. You will have to submit new paperwork if your income goes higher. Your debt to credit ratio is affected if it lowers.

What to do Before Closing

  • Bring a cashier’s check addressed to the title or escrow company that is managing the account for the list of fees  you’re responsible for paying.
  •  Make sure you have homeowners insurance. 
  • Tell your lender about any large deposits that have been added to your account.  This will help in the decision for final mortgage approval.

What Happens Before You Close

A loan officer will submit your loan file to a mortgage underwriter. The loan file goes back to the loan officer if anything is missing from the application. 

The underwriter may want more information for the loan to go through. The seller will then need to agree on a later closing date.

Common Closing Delays

The following reasons are the most common for closing delays: inability to trace payment funds, inexperienced loan officers, collection accounts from the buyers credit report, debt on the buyer’s side, missing documents, uncompleted repairs, a low appraisal, liens on the property and a delayed final walk through.

How to Close Your Mortgage on Time

 You need to be responsive to your real estate agent and lender to ensure your mortgage closes on time.

 Your lender may request additional information from you to complete your file.

List of Documents Needed for Closing

There are many documents needed from you to close on a property.

Make sure you have the following documents: 3-6 months of paycheck stubs, W2’s from the past 2-3 years, 2-3 years of tax returns, a letter of timely rent payments and bank information. 

You will also need a down payment gift letter if you are using gift funds, proof of any secondary income, divorce decree and bankruptcy/short sale/foreclosure paperwork if any of these documents are applicable to you.

You will need to submit a variety of documents before closing day.

Closing Day Tips

Your closing day is an exciting but stressful time. Keep in mind some of these tips during this period. 

  • Complete your home inspection as soon as possible. The seller needs to have enough time to make any needed repairs.
  • Take the day off of work on your closing day. Signing final paperwork may take a while.
  • Bring any mortgage documents, a Photo ID and proof of insurance with you.

The Seller’s Payment

The home’s seller is paid very shortly after closing. 

It usually only takes a business day or two for an escrow lender to generate a check.

The more organized you are, the faster you will get the keys to your new home.

Be Organized!

Closing on a home or property is an overwhelming time. Stay organized. Keep track of your finances. Communicate with your real estate agent and lender during this time. The closing period will go smoother if you do. You’ll be walking into the door of your dreamhouse before you know it.

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