Every home buyer would like to have a faster home closing, and in the case, if you are not careful about few things, the home closing process may take longer than it's prescribed or standard time.
In some cases, it may also drag longer than you hoped for, but you can always have a smooth home closing and can avoid the problems in many ways.
As soon as your purchase offered to get accepted, you would like to know how long will it take for a closing of the home buying process.
If you are paying the cash for the home, then the home closing will be fast and smooth otherwise the lender will decide what will be the required time or length of the home buying process and the time needs for the loan process.
It indicated that the lender has the significant role in the home closing process and you can't ignore him during the whole process.
If the buyer and seller are mutually happy and agreed upon specified date in the purchase contract, but the lender can't able to sanction the loan during that period, it does not matter what date was selected for the home closing.
As buyer and seller can't able to do anything in this situation unless the lender is ready to close. It is important to note that not every lender is moral enough to perform his duties on time.
The Process of Escrow Closing
It depends on where you live; there can be numerous entities can manage the closing process. The few of them are - The closing agent can also be the Escrow Officer, a closer, the title company or the real estate lawyer.
There can be the various closing process, even in the same state. As in California, the closing process can vary in northern California as comparing it with southern California.
The primary difference between the two can be the - how the escrow instructions are being drawn and signed on the front end. As in the south of California, it is done shortly after the offer acceptance, and in northern California, it is done just before the closing.
The closing will happen if all the terms of the purchase contract have been met, which is followed the deposit of deed by the seller and buyers need to deposit the funds.
Below are the types or sample conditions which are required in the state of California, which may vary from the closing process in your state.
- Purchase agreement and addendums should be fully executed.
- Deposit of earnest money deposit.
- Home inspection and waiver if any.
- The seller should fulfill all his obligations like providing pest control report, roof certification, home warranty, preliminary title policy, demand receipt of a beneficiary, repairs if any is the request for repairs have been made.
- Buyer should have performed the inspection of the home, which also includes a release of contingencies if it is demanded.
- Buyer should conduct the final walk-through of the home and waiver if required.
- Appraisal for a property by lender's appraisal.
- Loan approval by the lenders and should also have satisfactory loan conditions which are accepted by the buyer, which includes depositing evidence of a home insurance policy.
- Signed escrow instructions from short-time sellers and buyers.
- Signed and the notarized deed conveying title by the seller.
- Signed and notarized deed of trust by a vendor or seller and executed the promissory note.
- All loan documents duly signed by the buyer.
- Deposit of the buyer's fund from a lender.
- Buyer's down payment deposit and buyer's closing costs.
How Long Is the Home Closing Process
The buyers who have already got the loan preapproval versus loan pre-qualification are more likely to get the closing fast. The pre-approval process includes verification of certain required documents, and once these papers get approved the buyer can sign the purchase contract, which moves the purchaser very near to closing.
The lender also needs to verify the employment of the borrower, his bank accounts, and credit reports, and once it is done underwriters can process the paperwork which takes about one or two weeks.
The home closing process can get delayed if any document is missing from the file, such as preliminary title report, or the seller's condition of the sale.
Most of the mortgage loans which are federal usually close within the thirty days. But the special programs for first-time home buyers, and mostly which involves some help for the down payment will take about 35 to 45 days to close.
These particular processes include approval from about two underwriting operations. The process can sometimes slow down as complying with TRID guidelines and affect the home closing process because the entities who are working together do not have any previous relationships.
Delays in Home Closing
It has been observed that the biggest problem arises in most of the cases when the file is being submitted with the underwriter, loan officers are usually familiar with the loan underwriting guidelines, but they are not familiar with the response of the underwriter as each underwriter is unique.
The worse situation arose for the home buyers when they were waiting in the boxes with their valuables, just waiting for the movers and also not sure whether the loan will be approved by the underwriter or not. The last few days of closing have much excitement and suspense for the buyers.
Below are provided the common problems which can delay or can also prevent closing, most of these should be addressed before submission to the underwriter, but once you have submitted you can wait for the right things to happen:
- Review appraisal is being ordered by the underwriter or low appraisal, which is unlike the first assessment or appraisal.
- If any, additional debt is found out, in the buyer's updated credit report.
- If any, mistakes observed by the underwriter, in the buyer's credit report.
- Clouds on a title.
- Change in the marital status for the seller or buyer.
- Missing, insurance information.
- Expired loan or related program commitment.
- Missing updated bank statements and other financial documents.
- Latest liens or judgments filed against the buyer or seller upon title update.
The purchase contract should contain a provision that makes the closing contingent upon loan approval, then the buyer's earnest money deposit is at risk in case the loan does not get approved, and the transaction has not closed.