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According to the top mortgage software provider Ellie Mae, the average time it takes homebuyers in the United States to close on their transactions is 47 days as of February 2019. Purchase loans typically close 12 days later than refinance loans, on average. Learn more about the buying procedure, how much time is spent at each stage, and closing tips below.
How Long Does it Take to Close on a House?
It’s important to remember that while typical closing times for purchases and refinances may be 47 and 35 days, respectively, most loans actually close in between 30 and 75 days. Working closely with your lender will be necessary if you choose a close of escrow date of 30 days or less to make sure the loan closes on schedule.
When you take out a mortgage to buy your next house, the entire process—from application to funding—takes about 47 days on average. While some steps in the loan process are subject to mandatory waiting periods, others (like the need for appraisers) rely on outside service providers. Here’s a step-by-step to the typical loan process:
Summary: Average Timeline for Closing
|Milestone||Time to Complete|
|Disclosure||Up to 3 days for disclosure delivery; additional time for review and completion|
|Documentation||A few days to weeks depending on review times and availability of information requested|
|Appraisal||1-2 weeks for completion|
|Underwriting||1 to 3 days for initial review|
|Conditional Approval||1 to 2 weeks for additional underwriting review and clearing of conditions|
|Cleared to Close||3 day mandated minimum for acknowledging Closing Disclosure|
|Closing and Funding||1 to 3 days to receive and review signed loan documents and disburse funds|
It might take more time and effort to close your loan if your scenario is complicated (because of your income or other factors). The speed at which your loan closes may also be affected by uncontrollable additional factors, such as appraisal turnaround times. Potential red flags should frequently be disclosed up front rather than waiting for the underwriters to notice them and ask more questions later.
Once your home offer has been accepted, you can start the loan application process. Your name, Social Security number, estimated income, property address, estimated value, and requested loan amount are the six pieces of information a mortgage lender needs to consider your application.
The entire URLA, or uniform residential loan application, is five to six pages long and contains all the information necessary to process and underwrite your application. You might be required to provide this information to your lender over the phone, online, or on paper. The application process should be completed on the first day.
A mortgage lender must give you official loan disclosures, including a Loan Estimate, within three days once they have all six of the aforementioned details.
For all initial paperwork to be submitted via secure link through a portal, or via an electronic signature capture service, most lenders will request your permission to send disclosures electronically. It’s crucial to remember that if you refuse, paper copies of all disclosures will be mailed to you, potentially delaying the loan process by several days.
In order to submit a complete file for underwriting, your lender will need additional proof of your income and assets from you. There are frequently multiple requests for information because additional inquiries might be made while your documents are being reviewed. For instance, information about your mortgage, property taxes, and homeowner’s insurance will be requested if your tax returns indicate income from a rental property.
Depending on the availability of your documentation and how long it takes your lender to review it, the process of requesting, gathering, sending, and reviewing information and documentation could take just a few days or much longer.
As soon as you deliver your signed Intent to Proceed form to your lender, your appraisal can be ordered. As this third-party service is necessary to close the majority of loans and depends on the scheduling of a licensed, independent appraiser, the earlier you can order the appraisal, the better.
Setting up the initial inspection, having the appraiser conduct their inspection, and creating an appraisal report are all part of the appraisal process. Before being returned to your lender, the report is delivered to the appraisal management company for a quality control review. Although it might take longer in more remote locations, this process might take one to two weeks. It’s a good idea for sellers to use this opportunity to make some minor cosmetic changes to their property in order to increase the likelihood that the appraisal will result in a fair value.
An underwriter, or team of underwriters, will review all of the information regarding your income, assets, property, and credit to make sure that your application complies with all of the program requirements for the loan product you’re looking for. Many lenders have internal rules that go above and beyond the base requirements (sometimes called overlays) that you must also abide by, in addition to general product guidelines.
Underwriting turnaround times differ between lenders, but 24 to 72 hours is thought to be normal Turnaround times, however, will frequently lengthen due to an increase in the volume of loans if you find yourself in a hot buyer’s market or in the middle of a refinance boom.
Conditional Approval (1-2 weeks)
Once an underwriter has reviewed your application submission for the first time, they will either conditionally approve it, suspend it while they gather more data before making a decision, or deny it if it doesn’t comply with the program’s requirements.
Before approving your loan in full, an underwriter will typically review a list of additional documents, letters of justification, and other information that comes with a conditional approval. Before the underwriting requirements are met, the process of asking for, gathering, sending, and reviewing conditions may involve several rounds of back and forth. This could take one to two weeks, depending on how quickly reviews are completed.
Cleared to Close (3 days)
The last step before your final loan documents are prepared and delivered to you for signing and notarizing is getting the all-clear to close. Your lender will prepare a final Closing Disclosure for your review that includes all of the loan terms, costs, and other information.
You must wait for three days after receiving the Closing Disclosure before signing your loan documents. The law requires that you be given this time to review the terms of your final loan and speak with any advisors you may need.
Closing and Funding (~1 day)
Your lender receives the final loan documents after you sign them and checks them for accuracy and the accuracy of all supporting documentation before disbursing the loan. The new mortgage will be recorded with your county once your loan has funded, sometimes on the same or the following business day.
Typical Closing Times: By Loan Type
Depending on the requirements and guidelines of the program, different types of loans take longer to close. Here is a comparison of the typical closing times for standard mortgage loans, FHA loans, and VA loans, expressed in days:
|Loan Type||Time to Close (Days)|
Average Closing Time for a Conventional Loan
According to the qualified lending standards of Fannie Mae, a conventional mortgage loan closes in about 47 days. Conventional refinances are quicker and typically close in 35 days.
Conventional mortgage loans proceed in the most conventional manner, from application to funding. Contrary to FHA and VA loans, there typically aren’t any unique underwriting, appraisal, or approval requirements outside of those set forth by Fannie Mae or Freddie Mac. Generally speaking, refinances will close much faster than new purchase loans.
Average Closing Time for an FHA Loan
An FHA mortgage loan closes in about 47 days. FHA refinances are quicker and typically close in 32 days.
FHA loans typically close in a period of time very similar to that of conventional loans, but they occasionally need more time at particular stages of the procedure. For instance, FHA loans require that appraisals be completed by FHA-approved appraisers, and any safety or habitability issues must be resolved before your loan can close. Due to the accelerated process provided by FHA streamline refinances, the significant difference in closing times between FHA refinances and purchase loans is most likely the cause.
Average Closing Time for a VA Loan
The average time it takes to close a VA mortgage loan is 49 days. VA refinances are quicker and typically close in 42 days.
VA loans typically close more slowly than conventional loans. This is because not all lenders internally underwrite VA loans, and because VA loans have stricter underwriting requirements. The speedy process provided by VA streamline refinances is most likely the cause of the significant difference in closing times between VA refinances and purchase loans.
Other lenders must submit their loan files directly to the Department of Veterans Affairs for review and approval, significantly lengthening the time it takes for a loan to close. Only lenders with a direct endorsement from the VA are permitted to underwrite their own VA loans.
How Have Closing Times Changed Over Time?
The average closing time for all loan types over the previous 18 months, as of February 2019, was 42 to 48 days. According to this, it takes roughly six to seven weeks to close on a mortgage loan despite seasonal market fluctuations and changing housing trends.
Closing times have decreased on average due to improvements in underwriting procedures and a move to digital mortgage lending. Although many online lenders advertise quick closing times, your experience may differ greatly depending on your financial situation and the skills and resources of the lender you choose.
How Can I Get a Fast Home Loan Closing?
You can take a number of actions to hasten the closing process. Generally speaking, it pays to be ready and prompt when responding to lender inquiries.
Start the loan process as soon as possible by getting preapproved.
Get preapproved by your lender by providing them with information about your income, assets, and credit before you even have a contract on the property. Your lender must obtain a copy of your credit report, determine your debt-to-income ratio, and confirm that you have the resources necessary for a down payment before issuing a preapproval letter.
Making this preparation in advance increases the likelihood that your loan will be approved and saves time once your offer is accepted. To ensure you’re getting the best mortgage rate at this point, it’s wise to get preapproved with several lenders.
Respond to all lender requests quickly and provide complete documentation.
You can aid in keeping the procedure on track by supplying all necessary documentation as soon as possible and in its entirety. The borrower frequently delays closings by not responding to emails or picking up calls.
If the lender requests that you sign disclosures, provide requested documentation, or acknowledge time-sensitive documents like the Closing Disclosure, you should do so as soon as possible so that obligatory waiting periods can start. Your diligence will be increased for this, but it will be worthwhile once the loan is disbursed.
Choose a digitized mortgage process.
By using technology to create documents and disclosures, picking a mortgage lender who offers an online or digital mortgage process can also hasten the procedure.
Electronic signatures can be completed by digital mortgage lenders, and they can even review loan applications in accordance with Freddie Mac or Fannie Mae rules. While there is no assurance that other steps will proceed as quickly, a company’s dedication to enhancing efficiency through technology can be a good sign of its capacity to close your loan quickly.
How fast can you close an FHA loan?
The average amount of time needed to close an FHA mortgage loan is 47 days. FHA refinances are quicker and typically close in 32 days. FHA loans typically close in a period of time very similar to that of conventional loans, but they occasionally need more time at particular stages of the procedure.
What happens after appraisal FHA?
The majority of the time, an FHA appraisal will confirm that the property is in good condition and that the market value matches your expectations. If so, the home will be accepted for an FHA loan, and you can proceed with the closing.
What is the next step after appraisal?
After the appraisal, the next step is underwriting. The mortgage lender checks the application to make sure everything is in order, evaluates the risk, and either accepts or rejects the application. Some borrowers might be granted conditional approval, which means that a problem or clarification must be addressed.
How long does an FHA appraisal take to get back?
When the site appraisal is finished, it might take a few days or longer to get the complete appraisal report. After you and the seller reach an agreement and sign all the paperwork, FHA appraisals are typically ordered. The validity of an FHA appraisal is 120 days, or roughly 4 months.