Many first-time homebuyers and newer investors have questions about how long it takes to close. Specifically, they sometimes wonder how long after appraisal it takes to close on a house.
On average, it takes 47 days to close on a home, and typically, closing occurs around two weeks after the appraisal is completed. However, there's a lot more to the process than just the average numbers. We've laid out the entire mortgage timeline for you so you'll have a better idea of what to expect from each step in the process.
How long does it take to get a mortgage?
Many first-time homebuyers wonder how long it takes to get a mortgage. While conventional wisdom holds that the majority of mortgages will take between 30 and 60 days to close, the data suggests you may not even have to wait that long. According to Ellie Mae's July 2020 Origination Insight Report, it took buyers an average of 47 days to close on a loan.
It's important to remember that every closing has a unique set of circumstances that need to be met, so your closing may be shorter or take longer. For example, according to the report, the average time to close depended on loan type. While FHA loans were able to close in an average of 46 days, VA loans took about 49 days to close.
The mortgage timeline: A step-by-step guide
Now that you have a better idea of how long it may take to close on your home loan, the next step is to take a closer look at the process as a whole. We've laid out the entire mortgage process for you from start to finish so you'll have a better idea of what to expect from each step along the way. Note: We are assuming you've already found your new home and have a purchase contract in hand.
Below is a summation of what happens after your offer has been accepted.
Submitting your mortgage application: three days
Submitting your mortgage application is the first step in applying for a loan. In truth, this process should take less than an hour. You'll sit down with your lender and answer some questions about the property and your financial history.
After your information has been collected, your lender has three days to provide you with a loan estimate. As the name suggests, this document provides an estimate of all the costs associated with the loan. In particular, it will provide information about your monthly payment amount, your interest rate, and the closing costs you'll be expected to pay.
If those figures are satisfactory to you, your application will be submitted, and you'll move on to loan processing.
Collecting your documents for loan processing: two weeks
In the mortgage industry, loan processing is essentially a step that's meant to help get your file ready to go to underwriting. The objective is to gather all the necessary documentation needed to verify the information you provided on your mortgage application. While the documentation everyone will be asked for is unique, in general, you can expect to provide pay stubs, tax returns, and proof of homeowners insurance, among other things.
In this case, your loan officer will give you a list of documentation, which you will need to provide before you can move on to receiving final loan approval. This is often where people can shave the most time off of their mortgage process. The quicker you get the information to the loan processor, the faster you'll be able to move on.
It's also important to note that you won't be able to move on until your file is complete, so if you're missing financial documentation, try to collect it as quickly as possible.
Ordering an appraisal: one week
While you're working with the loan processor, your lender will also order an appraisal. In real estate, an appraisal is the process of determining fair market value of the home. Often, mortgage companies require satisfactory appraised value to ensure neither you nor they are paying too much money for the property.
While there are different methods, depending on the type of property you're purchasing, most likely an appraiser will use similar, recently sold properties in your area to determine the appraised value of your home. In this case, the appraiser will literally see how the home stacks up to the competition to assign it a value.
The appraisal process may vary depending on the type of loan you receive as well. With an FHA loan, for example, the appraisal must be conducted by an FHA appraiser, and there is a strict list of requirements that must be met.