You can close on a house in one to two weeks if you’re paying cash, while it may take more than 50 days to close on a home if you need a mortgage. If you’re buying in a competitive housing market, understanding how long it takes to close on a house could mean the difference between an accepted and rejected offer.
How long does it take to close on a house if you can pay cash?
It can take as little as seven to 10 days to close on a house if you can come up with the cash to buy it. You won’t need the paperwork required by a mortgage company, but there are still some important steps you’ll need to take.
- Prove you have the funds available. It’s not uncommon for a seller to request a bank or investment fund statement before accepting an all-cash offer. You can save time by providing this information with your offer letter.
- Set up escrow. An escrow company’s job is to act as a third party, oversee the transaction and make sure the terms of the contract are met. Funds should never go directly to the seller.
- Order a title search and buy title insurance. As a cash buyer, you aren’t required to buy title insurance, but it may still be worth it to obtain a title search to protect yourself against claims related to the prior owner’s actions. Mortgage lenders require a title search to check a home’s title history for past liens or heirs.
- Get a home inspection. A home inspection isn’t required on a cash purchase, but it’s highly recommended to check for hidden problems the seller may not be aware of.
How long does it take to close on a house if you need a mortgage?
It takes between 48 and 53 days to close on a house if you need a mortgage backed by the Federal Housing Administration (FHA) or U.S. Department of Veterans Affairs (VA), or a conventional loan. According to ICE Mortgage Technology’s August 2021 Origination Insight Report, it took:
- 48 days to close on a conventional loan
- 51 days to close on an FHA loan
- 53 days to close on a VA loan
However, a faster closing process is possible if:
You don’t need an appraisal. You may be eligible for an appraisal waiver if you’re making a large down payment on a conventional mortgage. Fannie Mae or Freddie Mac — government-sponsored enterprises that fuel the mortgage market — offer property inspection waivers (PIWs) or automated collateral evaluations (ACEs) if you qualify.
You have a strong financial profile. A credit score above 740, two years’ worth of stable employment, a salary and a large down payment may lead to a faster closing. Lenders may need management approval to approve a loan with complex self-employed income, credit history bumps or an unusual down payment source.
You’re buying a home with no title issues.If you’re buying from a seller who has owned your home for two years or more and the home isn’t in foreclosure, the title search shouldn’t take long. However, if the home is part of a divorce settlement or the current owner is in mortgage default, this process may take longer.
What to expect on closing day
Once your loan is ready for closing, the actual closing typically takes one day if you’re buying a home with cash. Federal law mandates a three-business-day closing process that begins when the lender issues a closing disclosure if you’re taking out a mortgage.
The table below breaks out what happens with each type of closing:
|Closing on a house with cash
||Closing on a house with a mortgage
- Review the settlement statement
- Review and sign any paperwork related to the transfer of property ownership
- Deliver funds to the escrow company or attorney with a cashier’s check or wire from your bank
- Once the title company receives funds, they are disbursed to the seller and any agents
- Ownership is transferred to your name and you own the home
- Review your closing disclosure three business days before closing
- Request any corrections to the figures if needed
- After the three-day period expires, review and sign closing documents
- Deliver closing funds to the escrow company or attorney with a cashier’s check or wire from your bank
- Lender reviews your documents and wires the funds if everything is correct
- Once the escrow company receives your funds, they are disbursed to the seller and any agents
- Ownership is transferred to your name and you own the home
What could delay closing on a house?
The following common issues and mistakes may slow down or bring your entire house closing process to a screeching halt:
- Incorrect information on your loan application. Lenders vet all the information on your loan application before closing. If you’re missing a prior address, a middle initial or the start and end dates for a previous employer, this could stall the process.
- Problems with a home inspection. You may end up in a haggling match over repairs suggested in a home inspection. The seller may reject some requests, leaving you on the hook to either fix them yourself after closing or cancel the transaction and find another home.
- An appraised value below the sales price. If the value on your home appraisal doesn’t match the sales price, you’ll need to decide if you want to pay the difference, ask the seller to lower the price or cancel the transaction.
- A title problem comes up. Tax liens, judgments and disputes with heirs to a home are just a few title problems that could extend your closing timeline. If the property is in foreclosure, there may be delays in obtaining final payoff figures from the lender.
- Your credit score drops or new credit is opened. Lenders often check credit before closing to verify you haven’t opened any new accounts. If you’ve been on the house hunt for a while, the lender may run a new credit report (they expire after four months). If your score drops or you’ve racked up new debt, you could end up with a lower rate — or, even worse, a denied loan.
- Your lender can’t verify your employment. It’s not uncommon for lenders to verify your employment several times, up to and including on your closing day. Give your employer a heads up as your closing date approaches so they know to look out for the employment verification calls.
- You don’t provide the requested documents quickly. Don’t pack all your financial papers away until your closing is scheduled. Lenders may need you to chase down an old bank statement or W-2 prior to closing.
- Your down payment funds can’t be tracked. A large cash deposit or wire into your checking account may require you to verify where the money came from. If you can’t document it, you can’t use it.
- The sellers live out of state. It may take a few extra days to send documents to and receive them back from an out-of-state seller.
- Documents are signed incorrectly. A notary will usually prevent this delay, but something as simple as a missed middle initial could create a last-minute delay in getting your loan funded.
FAQs about closing on a house
What does ‘clear to close’ on a mortgage mean?
“Clear to close” is a lender term that means you’ve satisfied all the terms of the loan and can finalize your loan paperwork.
How long does funding take after closing?
This depends on whether your lender funds under “wet” state or “dry” state rules. In a wet state, your funds are typically delivered at the same time as your closing documents. In a dry state, the lender doesn’t wire the money for your loan until they review and sign off on the closing package. Currently, only Alaska, Arizona, California, Hawaii, Idaho, Nevada, New Mexico, Oregon and Washington allow dry fundings.
Can you close on a house in two weeks?
Yes, if you’re prepared to pay cash or qualify for a mortgage that doesn’t require an appraisal.
How can I speed up closing on a house?
You can pay cash or choose a mortgage program that offers an appraisal waiver option. Make sure to stay on top of documentation requests if you’re taking out a mortgage. You should also open escrow and order inspections as quickly as possible to keep the process moving along.