Hey, homebuyer. Good news! So far, you’re doing everything right:
- You got pre-approved before you went househunting.
- You found your dream home.
- And your offer was accepted.
If you’re like most first-time homebuyers, you might be asking how long it usually takes to close on your new home. There are typically six steps, although there could be more depending on the state you’re buying a home in. But generally, you’ll cover these steps before you get the keys to your new digs.
The home closing process in 6 steps
- Set up an escrow account. The term “escrow” refers to all the milestones that happen between signing a real estate purchase agreement and closing. An escrow agent is a neutral third party who holds all the funds and documents related to the purchase transaction until everything has been settled. The process begins when the homebuyer signs a real estate purchase agreement with the seller and — in some cases — makes an earnest money deposit. Before closing, all the terms and conditions of the purchase agreement must be met. Only then will the seller deposit the deed as the buyer deposits the remaining funds.
- An appraisal is ordered. Once the homebuyer enters escrow, the mortgage lender orders a home appraisal. It’s the appraiser’s job to estimate the house’s value in current market conditions. This is done to ensure that the borrower is not taking out a home loan that exceeds the property’s overall value. The appraiser reports their findings directly to the lender.
- A title search is conducted. The “title” is a legal document that proves ownership. The title search is when public records are examined to confirm who legally owns a property and determine if any claims on the property could prevent the sale. A title search will uncover title defects tied to the property, like errors in public records, unknown liens, illegal deeds, missing heirs, forgeries, undiscovered encumbrances, undisclosed easements, boundary disputes, undiscovered wills or false impersonations of previous owners. If there are any claims, they’ll need to be resolved before transferring the title to the buyer.
- A home inspection is completed. A physical home inspection is necessary to shed light on any potential problems with the property. If a home inspector finds something serious — like cracked foundations, leaky roofs, mold or any number of issues —the buyer will have an opportunity to either ask the seller to fix it, renegotiate the selling price or back out of the deal entirely.
- Documents are prepared. Your mortgage lender will assemble all the necessary documents and deliver them to the escrow agent, who will double-check them to ensure that everything is buttoned up and ready for the closing. The escrow agent also considers all fees and calculates all the closing costs that need to be paid on the buyer’s side — as well as the seller’s side. The homebuyer will then receive a disclosure document that indicates the total amount due at closing. This usually arrives by email within a few days of closing.
- The final countdown! At the closing, the homebuyer and seller will sign various documents relating to the sale. Then the homebuyer pays the closing costs that are due. Leave your personal check home: You’ll need a certified or cashier’s check from the bank. The property title will then be updated to reflect the transfer of ownership. Lastly, all signed mortgage documents will be collected by the lender, who will then release the funds necessary to buy the property. At that point, you get the keys to your new home!
How long does this all take?
Escrow leading up to closing takes around 30 to 40 days on average. It can take longer in the case of a more complicated transaction or if the title search uncovers unforeseen anomalies. For example, some home purchases clear the title search process with no issues whatsoever. Other properties might have liens, legal judgments or other title defects, like those listed above, requiring additional research that can add days or weeks to the escrow process.
In most cases, closings typically happen within the agreed-upon period specified in the purchase agreement. Rescheduling only happens in extreme and unusual circumstances.
We get it that closing on a house seems like a considerable undertaking, but you can avoid common roadblocks at pitfalls if you know what to expect. The secret is to be prepared. As always, getting the help of an experienced mortgage professional will help you navigate the process with more confidence. To get started, find a Movement Mortgage loan officer in the area you’re looking to call home.