Of all the traits you need when purchasing a home, patience may be the most important. There can be months, even years, between shopping for properties and finally settling into your own house. The exact length, however, depends on many factors. To have a successful, stress-free purchase process, you need to understand the time it takes to close on a home.
Mortgage Times: The Major Phases
Each purchase is unique, but if you are using a mortgage for your next home, there are a few steps you can expect…
The first step in the entire process is the application for a loan. Getting pre-approved is an important part of the real-estate industry, as it helps agents know that you are a serious, motivated, and capable buyer. While essential, this phase is also convenient, as it can be completed online, in person, or even over the phone as long as you have the right information.
Documentation of Paperwork
The next phase in your process will be the supporting paperwork. This can include W-2s, paystubs, tax returns, and bank-account statements. All of these documents are intended to demonstrate your capability as a borrower. In some cases, your lender may request additional information.
If you are a qualified borrower, you will be issued an approval letter from the lender or lending agent. Basically, this letter will say that you can be approved once all the right steps are completed. If there are no changes in your income or debt-load, the letter says that you will be able to complete approval.
Lenders loaning money against a home need to know that the property is valuable. For this reason, it is in their best interest to have an appraisal completed before final approval. In some cases, this step can be skipped, but it is a common source of delays in the purchase process.
Lender’s Appraisal Review
Once the appraisal is complete, the lender will review the document, analyzing the information for any potential issues.
Now comes the exciting part: final closing on the loan! As long as you have the same job, income, and debt load, you will most likely be approved.
Closing Times: How Long Should You Expect
A Look at the Numbers
In most cases, closing on a home takes about about a month to a month and a half. There can be shorter and longer times, but Ellie Mae, a software company that processes mortgages, says the time is usually about 35 to 45 days on average.
This company releases a monthly report of data that can be very useful for this subject. The report features a variety of numbers, including credit score distributions, typical loan-to-value ratios, and (most important for this article) closing times. The June 2019 report stays that average closing time, including both the time purchase and refinancing, was 42 days.
For FHA loans, the average time to close for a purchase was also 45 days, while conventional purchase loans had a closing time of 44 days. It appears that VA loans take the longest, with an average purchase closing time of 48 days. (The VA has a reputation, somewhat exaggerated, of taking a long time to process a loan.)
These are fairly typical numbers compared to the recent past. The previous two years had closing times between 40 and 50 days in most cases. The longest wait was 52 days, which occurred on VA loans for a purchase in January of 2019. The shortest time was a speedy 32 days, which occurred for refinancing at a few different times and for a couple different loan types.
These numbers, of course, are simply averages. The specific time for your situation will depend on many factors, including where you are in the buying process…
Just Looked at a House? Expect as Much as 60 Days
You can likely expect as low as 30 and as much as 60 days from the start of the process to the closing of the purchase. Making an offer and coming to an agreement on price usually takes no more than five days. During this phase, however, you can complete the full loan application because the lender has a specific property with which they can either accept or reject the loan. (The property is essential to the loan, so financing can’t officially proceed until a house is found.)
If you choose, you can speed up the process by getting pre-approved for mortgages as soon as you are seriously looking at homes. In most cases, it’s best to get pre-approved first, then look for a home.
Found a House? Expect as Much as 50 Days
If you have found a house, you can expect as much as 50 days before closing. During this phase, the appraisal reports can be a major point of delay, but once the appraisal is finalized, the process will move swiftly. In a busy market, scheduling an appraisal can take time, so ask your lender about current appraisal times before you buy.
You may be able to reduce the time if you are going with a loan supported by Fannie Mae or Freddie Mac. These two organizations are, in some cases, waiving the appraisal requirement, so you may be able to secure the purchase in a shorter timeframe.
Appraisal to Close? Two to Three Weeks
Once the appraisal is complete, you should only need about 14 to 21 days to complete the rest of the process and finalize the closing. In most cases a lender will be working on the mortgage approval while the appraisal is taking place, so once the appraisal comes in, assuming there are no major issues, the lender will be prepared to move forward.
When You Find a Home, Get the Right Mortgage
Whether you live in San Diego or one of the surrounding suburbs, you can find the perfect mortgage for your needs when you work with our team. Contact us today to get the service, support, and guidance you need to make the right choice for your future!
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