How Long Does Closing on a House Take?

Real estate is notoriously illiquid: it costs a lot of time and money to buy or sell. So how long does closing on a house take, in the real world?

As an investor, I’ve closed on a house as quickly as three days. But some homebuyers take more than two months to settle on a house. Real estate agents love to say it takes “30 to 45 days” to close on a home, but the data suggests that the average homebuyer often takes longer. 

The faster you can close on a house, the better bargain you can often score — if you can convince the seller that you can actually close within the promised window. Keep the following home closing steps in mind, along with some tips to speed up the process. 

Understanding the Timeline of Home Closings

Data compiled by ICE Mortgage Technology puts the average purchase closing at 43 days currently. During the pandemic, that figure rose as high as 56 days. 

Other estimates put the current closing average at 47 days. As a general rule, expect the process to take about a month and a half for the average homebuyer.

But the process can move lightning fast for investors buying with cash, or at a snail’s pace for homebuyers taking out a government-backed mortgage. Borrowers taking advantage of FHA loans, VA loans, or USDA loans can typically expect the process to take longer than conventional mortgage loans. 

Financing isn’t the only piece that can slow down the puzzle. If the property has a cloud on the title, that can take weeks to resolve — if it can be resolved at all. The lender’s chosen appraiser could fall behind, and their backlog of orders can delay your appraisal. The same could happen with your own home inspector. 

For that matter, if the home inspection report comes back with surprise problems at the property, the renewed negotiation between the buyer and seller can add even more delays. 

Other complexities could also drag out the property closing process. For example, if the transaction involves multiple properties, or involves unique requirements such as new deed restrictions, that too adds time to the process. 

How long does a typical closing on a house take? About a month and a half, but your actual closing timeline could move much slower or faster depending on the many variables involved. 

Steps Involved in Closing on a House

As alluded to above, buying a house requires many steps, each of which can cause delays. 

A typical property purchase involves the following steps to get to the settlement table. 

1. Sign the Sales Contract, Put the EMD in Escrow

When you make an offer to buy a home, you typically include an earnest money deposit or EMD to show the seller you’re serious. If you and the seller agree on a price and purchase terms, you then sign a contract of sale, at which point you put down that deposit.

But the seller doesn’t hold that money in their own bank account. To protect you from the seller defaulting on their side of the contract, one of the real estate agents typically opens an escrow account for a neutral third party to hold the deposit. Title companies offer this service, for example. 

2. Negotiate Loan Terms

After signing the purchase contract, the buyer’s first phone call usually goes to their lender (assuming they don’t plan to buy in cash). The buyer should already have shopped around among lenders, but they can do a quick rate and term comparison now if not. 

You can and should negotiate for lower interest rates and loan points. If you like, you can also buy down the interest rate by paying higher fees up front.  

Once you agree on the rate and fees with the lender, the loan officer will lock in your interest rate. Rate locks last between 30 and 120 days, and the lender may or may not charge a fee for locking your rate. If you lock in your rate for 30 days but your closing takes longer, you may have to pay a fee to renew the rate lock. 

3. Provide Documentation

Your loan officer will provide a list of documents that they need to start processing your loan. The longer it takes you to gather and send them these documents, the longer it will take to close on your home. 

Required documentation typically includes:

• Last few years’ tax returns
• Recent pay stubs, 1099s, W-2s, or other proof of income
• Monthly job-related expenses
• Several months’ bank account statements
• Several months’ investment account statements
• Down payment gift letters (if friends or family are helping you with the down payment)
• Investment property details (if you own other properties)  
• Whole life insurance policy details (if you have any)
• Rental history, including contact information for previous landlords (if you currently rent)
• A detailed list of all your debts, typically with recent statements
• Child support or alimony paperwork

This list only marks the starting point of required documents. A loan processor will assemble all of this information in your file, then pass it to a loan underwriter. Underwriters inevitably come back and ask for more details, more information, more documentation. Again, the faster you jump on providing it, the faster you can close on your property. 

4. Appraisal & Home Inspection

The lender orders an appraisal (which you pay for), to determine the market value of the property. It protects the lender. If the appraisal comes back lower than the sales price, the lender typically bases the loan amount on the appraised value rather than purchase price. 

You order a home inspection to determine the condition of the property. This due diligence — more on this momentarily.  

Both require coordinating access to the property with the seller and scheduling in advance, and both can delay the property closing.

5. Possibly Renegotiate Based on the Home Inspection

If the home inspection reveals some previously undisclosed property issues, you may request that the seller make repairs or provide funds for you to make them post-closing. A new negotiation can take place here, which can of course delay closing. 

If the buyer and seller can’t agree on new terms, they may opt to terminate the contract. Most home buyers include a home inspection contingency in the contract, allowing them to withdraw with their EMD if the inspection uncovers unexpected problems at the property. 

Many investors waive this option however, offering to buy the property as-is without an inspection contingency. 

6. Mortgage Underwriting

Once the appraisal comes back, the loan underwriter reviews the file and comes up with a list of fresh requests. Among other things, these will include homeowners insurance or landlord insurance. 

It falls to you to provide the newly requested information quickly. The slower you respond, the longer the delay to your property closing. 

At a certain point, the underwriter issues a conditional approval. They still need to review some final documents before issuing a “clear to close,” but as long as all requested documents come back looking clean, you can expect the loan to be approved. 

Lenders often start the title search before or early in the underwriting process, so it runs simultaneously.

7. Title Search

A title company reviews the legal ownership history of the property, along with all liens, encumbrances, deed restrictions, and any other potential “clouds on the title.”

Some liens come as no surprise, such as the seller’s first mortgage lien. Others might throw a wrench in the works, such as a tax lien for their unpaid IRS bill. 

The title company also confirms that no third parties have any claim to owning the property. They won’t issue title insurance if they have any doubts about the seller’s ability to convey clean title. And if they don’t issue title insurance, the lender won’t cut a check. 

8. Final Preparation for Closing

Once the loan underwriter receives a clean title history report and all other outstanding documents they requested, they’ll sign off on the loan as clear to close. 

The title company issues a Closing Disclosure to both the lender and to you, detailing every single expense for all parties. It also lists where all funds are coming from, such as the loan amount, your down payment, and closing costs charged to both the buyer and seller. 

Under federal law, you must wait three days between receiving the final Closing Disclosure and settling on the property. Review it carefully, and make sure you understand every charge on every line. If you see any surprises, now is the time to clear it up with the title company, lender, and seller.

9. Final Walkthrough

The day before closing, walk through the property to confirm it’s still in the condition you agreed on with the seller. 

If you see anything that doesn’t fit your expectations, say something now or forever hold your peace.

10. Settlement

How long does closing paperwork on a house take?

Once all parties have reviewed the Closing Disclosure, they schedule the closing itself. Aim to schedule settlement for earlier in the day, and ideally earlier in the week, in case last-minute delays snag your settlement. A botched Friday afternoon closing can leave you hanging until Monday morning. 

At one time closing often involved all parties meeting in the same room to sign documents and exchange bank checks. In today’s world, it can happen asynchronously or even digitally. 

The process can take up to several hours, with hundreds of pages of documents to sign. From the deed to the deed of trust or mortgage, the promissory note to the escrow agreement, and a hundred disclosures, your hands will get cramped from signing. 

You can fund the transaction with either a bank check or wire transfer. Don’t roll in with a personal check for $50,000 and expect the title company to shrug and accept it as confirmed funds. 

A notary settlement agent or real estate attorney will preside over the closing. They confirm identities and verify that each party signs and dates all documents correctly. 

Understanding the Costs Involved in a Home Closing

Most people underestimate the countless costs, large and small, that go into buying a property. 

Budget for the following property purchase costs, plus a buffer for odds, ends, and other unexpected costs that strike along the way.

Appraisal

A 2023 survey by the National Association of Realtors found that the average home appraisal costs $500. But it could cost more if you buy an unusual, unique, or complex property that requires additional work by the appraisal. 

Home Inspection

Angi — formerly Angie’s List — found the average cost of a home inspection to be $343. 

Property Insurance

Buyers must prepay for the first year of homeowners or landlord insurance up front. If the lender escrows for property taxes and insurance, you’ll also pay monthly to build up reserves for the next year’s insurance premium.

Prorated Property Taxes

Likewise, you’ll pay for prorated property taxes for the remainder of this tax period, and you may also prepay the following tax bill. 

HOA or Condo Fees

If the property sits in a homeowners association or condo association, expect to prepay the association fees as well. 

Lender Fees

Mortgage lenders love their fees. They may charge origination fees (points) as a percentage of the loan amount, and also charge “junk fees” to gouge you every other which way that they can. 

These flat fees often include names like “processing fee,” “underwriting fee,” “wire transfer fee,” “file review fee,” and any other fees they can justify. 

Title Fees

The title company charges for its work as well. These can include title search fees, title review fees, escrow service fees, attorney fees, settlement fees, and more. 

Transfer Taxes & Recordation Fees

The government wants in on this action too. Local and state governments charge fees for property transfer taxes, and for recording the change in ownership in public records. 

Initial Repairs

If you buy a fixer-upper to flip or refinance as a rental, you’ll need some or all of the initial repair costs.

Even when you take out a hard money loan that covers renovation costs, you still need to cover the first draw. You make the first round of repairs, then the lender’s inspector visits the property to verify that you completed the work. Only then do they reimburse you for the first draw of renovation costs. 

Cash Reserves or Holding Costs

While not a fee or expense per se, most lenders require buyers to have a certain number of loan payments available in cash as cash reserves. For example, a lender might require that you have six months’ worth of loan payments (including escrows for property taxes and insurance) in your checking account at the time of closing.

Flippers and BRRRR investors will need to budget for holding costs, as they renovate the property. Every day between when they buy the property and when they sell or rent it out costs them money, so make sure you plan accordingly. 

Final Thoughts

How long does closing on a house take?

It is technically possible to close on a house in under a week — but only for the most experienced, well-connected real estate investors. 

Typical investors usually take a few weeks to close, or even a month. Homeowners take even longer, in the 30-60 day range in most cases. 

You do have some control over the process however. Stay in constant communication with your lender, title company, home inspector, appraiser, and the seller. It falls to you to promptly get all requested documentation to the lender. For that matter, you can and should screen lenders for how long they take to close. Or skip lenders entirely and buy in cash. 

Know what you’re getting yourself into before buying a property. The better you understand your lender’s timeline and the property condition, the fewer delays you can expect along the way. 

And the faster you close, the better you can negotiate a lower purchase price up front.