When you buy a new house, it might not take long to negotiate and agree on a purchase price, but there's a lot more that needs to happen in the homebuying process before the property legally becomes yours. That doesn't happen until closing -- the date when you sign all of the paperwork and officially become the owner of the home.
The closing process is not a quick one, especially if you're like most home buyers and plan to use a mortgage to purchase your property. In most cases, closing on a house in a month or less would be considered very fast. Here's a quick guide to the timeframe you should expect when closing on a house, the steps that need to happen before you can go from being a prospective home buyer to an official owner, and some ways you might be able to avoid delays and speed up the process.
The short answer
There's no single answer when it comes to how long it takes to close on a house. Closings can take as little as a week or as long as 60 days (or sometimes even longer) depending on the circumstances.
As of August 2020, it takes an average of 45 days to close on a home purchase, according to the Ellie Mae Origination Insight Report. Most closings are scheduled for a period of 15, 30, 45, or 60 days after a signed purchase contract, although other time frames are certainly possible.
Steps to close on a house
Why does it take so long to close on a house? The answer is that there are a bunch of things that need to happen in the homebuying process before real estate can officially change hands. Here's a list of the most common steps (in rough chronological order) that make up the closing timeline:
Signed purchase contract - This is the first thing that needs to happen to get the ball rolling. After negotiating a purchase price with a seller, the closing process can begin. Your purchase contract will also contain the expected closing date.
Earnest deposit - Typically, a buyer will submit a small deposit along with an offer to purchase a home. This is known as an earnest deposit, or earnest money, and will be held in an escrow account.
Home inspection/Due diligence period - Purchase contracts typically provide for a time period during which the buyer can conduct whatever inspections they see fit and can back out of the contract or ask the seller to make repairs. Depending on the situation, this is typically from three to 10 business days in length, unless the buyer waives the right to inspect. If repairs are needed, it can add time to the closing process as well.
Appraisal - This is a step required by lenders but is optional if you're paying cash (but it's still a good idea). An appraisal is essentially a professional determination of the home's value. Lenders require it to make sure they aren't loaning more money than the property is worth, and it can also help prevent you from overpaying on a cash sale. Typically, this takes place within the first few days after a signed and executed purchase agreement is in place.
Financing - Unless you're buying your new home in cash, you'll need to get a mortgage. And this process can take a while. You'll have to extensively document your income, employment situation, assets, and more to your mortgage lender. Your loan officer will conduct a thorough review of your qualifications and the property and will then send your file to be reviewed by underwriters. In all, the mortgage process can take a month or longer from application to closing. You can cut some time off of this by filling out a mortgage application and getting pre-approved before you start to shop and by responding to documentation requests immediately, but this is still a lengthy part of the real estate closing process.
Home sale contingencies - Is the buyer moving from an existing home? Many purchase contracts have a contingency that says the buyer is only obligated to follow through with the purchase if their existing home sells. If it takes longer than expected for the buyer to sell their current home, it can lead to significant closing delays.
Hazard insurance - This is a requirement if you're obtaining financing but is still generally a must-do even if you're buying a house in cash. You want to make sure you (and your lender) are protected in case of fires, floods, storms, theft, vandalism, and other potentially damaging situations. And a homeowners or landlord insurance policy will protect you from liability if another person is injured or their property is damaged while at your house.