How Long Does It Take to Close on a House?
Hello! It’s Christian from San Diego County HomeBuyers again, and it’s another beautiful day in America’s Finest City! In this video, I’ll answer the question, “how long does it takes to close on a house?”. I’ll also be identifying the key milestones that you should be aware of throughout the process of closing. Let’s get into it!
After weeks of searching for that dream home, you’ve had your offer accepted. For those paying cash, this will be less of a problem. But for those using a home loan, the lender is going to be key in determining how long does it take to close on the house. Lenders have the final say when it comes to purchasing a house with borrowed funds. You may have agreed to a closing date with the seller, but if the lender is not able to process your loan in time to meet that date, then that date means nothing.
When you find yourself in a situation like this, then you know that closing on the home will only happen if the lender is also ready to release funds for the purchase.
Also, to answer the question how long does it take to close on a house – it depends. But, whether you are buying the house with cash or financing, you must know and understand the Escrow closing process, or the process of closing with attorney’s in some states. Even most FSBOs (for sale by owner) use escrows to close deals. But the process varies from state to state, despite being pretty similar, so do check with a local expert real estate agent, because the closing agent could be a real estate lawyer, a title company, an escrow officer or an escrow company.
I’ll go through the process the way it happens in my home state, California. Here’s a little known fact for many of us here in Southern California – closing on a house in Northern California is quite different than closings here; here in Souther California, we prefer to agree on escrow instructions after the offer is accepted and Northern California prefers doing that just before closing.
To really answer how long does it take to close on a house, let’s take a look at the milestones of the closing process as it pertains to California, in general:
1. The first step is a purchasing agreement which has been fully executed – having been signed by both parties. This always sets the precedent.
2. Making a “good faith”or “earnest money deposit” not necessary, but recommended. In fact, “consideration” does need to be given, but it doesn’t actually need to be money – just whatever the two parties (the seller and the buyer) agree is “valuable.”
3. Next up is a home inspection; now it’s optional, but highly recommended. I have a video on Understanding Home Inspections. The link will appear on your screen if you want to check it out.
4. The seller should fulfill their obligations by submitting all relevant documents, like a title policy, warranty, receipts, and repairs, if requested – just to name a few.
5. Completion of home inspection. Get the inspector’s report and read it. It may have issues which can make renegotiations on price possible.
6. Lender’s appraisal, for those buying the property with a loan. For more information on that, check out my video on appraisals in the video description.
7. Loan approval, if the lender is satisfied with the appraisal report and finds you in good standing.
8. Signing of escrow instructions between parties.
9. Seller conveys title of property to escrow officer.
10. Buyer signs all documents as required by lender to release loan.
11. Buyer tops up “good faith” deposit to minimum deposit required with escrow officer.
12. Lender pays off seller.
13. Buyer settles all closing costs.
You may have guessed right; that process was what will typically happen in Northern California, as escrow instructions were signed just before closing. That’s really the only difference between Northern and Southern California as it pertains to how long does it take to close on a house with a loan. So, how long does it take to close on a house, in general? Well, the short answer is about a month if you’re using financing.
But what about cash sales? Well, these typically work a lot faster. If you are paying cash for a house like we do, you tend to skip all the time a lender will spend on an appraisal and processing the loan.
But even with a loan, you can speed your process up if you manage to get a preapproval. We have a few preferred lenders we like to direct our happy buyers to to get preapproved for a loan (and I’ll include their links and information below in the description to this video). It’s always advisable to make a request for preapproval with the lender you intend to finance your purchase through, before beginning your search for a home. Once you have been preapproved and locate the house of your choice, you save time as the lender has already verified your employment, assessed your ability to repay and your credit history. The lender will typically spend no more than ten working days on approving your loan.
If your credit history is not in good standing, you can take advantage of a federal mortgage loan, which can take up to a month to process. We have a few videos that go into these topics in detail, and you can find the links to these videos in the description below.
So, how long does it take to close on a house? With all this in mind, let’s talk about a few things you can do to speed up the process yourself as well as a few potential pitfalls that buyers and sellers alike might unknowingly fall into – these pitfalls we’ll look at can actually delay the closing process a lot.
So, even though buyers generally can’t control how quickly underwriters approve a loan, you can save some time by making all documents they’ll require readily available. If you submit some of these documents, and then take too much time to provide the rest, that will likely work against you and cause a delay in the closing timeline. Underwriters generally work faster for clients who demonstrate some level of seriousness and commitment. And that’s really the BEST practice to help expedite this process.
Now what about these ‘pitfalls’ to avoid? Well, potential delays are sometimes caused by buyers and sellers alike. If the house receives a bad appraisal, lenders may be reluctant to move forward with processing the loan. This can be solved if a seller deals with all known issues before putting up the building for sale. Submitting inaccurate documents or making errors which could have been avoided on forms are some of the most common issues that cause delays from buyers and sellers. Do well to hire the services of a real estate agent to help you make this process hassle-free.
If you’re looking to sell your house in San Diego, reach out to us via phone at (619) 500-2444, send me an email to [email protected], or simply visit our website at www.sdchb.com for more information. We can close quickly (often times within 7 days), or on your timeline – and if you’re looking to purchase a home, with preapproval from your lender, or one of our preferred lenders which you can find in the description below, we can make the closing process a stress-free and enjoyable less than 30 day process.
Thanks for watching! Hopefully by now, we’ve answered the question, “How long does it take to close on a house?” and you liked this article and the video, please subscribe to our channel to ensure you don’t miss our tips & tricks about all things real estate, and follow us on social media, too! If you didn’t like this video, please subscribe to our channel and let us know how we can improve. Do leave comments in the comments section below, if you have any questions.
Once again, thanks for watching, This is Christian from San Diego County HomeBuyers – The real estate team you love & know – we’re the team that knows your home: San Diego
See you on the next one!
Links described in our video and this article:
Understanding Home Inspections & Appraisals
Some of our favorite lenders: