There are some buyers who have no time constraints on closing when they find their dream home. They don’t need to close at any particular time. But most other buyers have a deadline to buy and close on their new home. Either they have a lease on their current residence that is expiring or they just sold their home and need to quickly buy another home. So how long does it take to close on a house after you sign a contract to buy?
The answer depends on whether you are paying for your new house with your own cash or whether you need to get a mortgage. If yours is an all-cash deal, you will need time to get the house inspected and any repair issues negotiated. Then, your attorney needs to order a title search and needs to review title. If there are any mortgages on the title, you need to give the seller enough time to order a payoff statement from each lender. Usually, the minimum time that I see in the contracts that I work with is about 30 days from contract signing to closing.
If you need to get a mortgage, you will apply for a mortgage after your Attorney Review period is completed. This can be anywhere from one day to two weeks after you and the seller sign the contract of sale. How long does it take to get a mortgage approved? It depends. When mortgage interest rates go down, applications for refinances go up and approvals take longer to get. Right now, in the autumn of 2011, most mortgage applications are taking at least 30 days. If you do not have a decision by the time your contract states that you need to have a decision, your lawyer should be asking the seller’s lawyer to extend the timeframe to get an approval. Your lawyer should be asking for a week or so. There have been times when I have asked for additional extensions (when the lender has really been taking a long time to process the loan application).
After you have received your mortgage approval, the lender still needs to review the title search, finalize any underwriting conditions and then they give you the authorization to close the loan. Although your contract of sale always states a closing date, you cannot close on your new house until your lender says it will let you close (because without their money, you do not have the funds to close). It usually takes about a week or so after you get your commitment letter (that states that your loan has been approved) before your lender gives you the go-ahead to close.
Altogether, from contract to closing, if you are getting a mortgage loan, it takes between 45 and 60 days to close. You need to make sure that you have enough time to pack up all of your possessions. If you are renting an apartment, you need to make sure that you give your landlord sufficient notice under the terms of the lease. But you don’t want to give notice too early or you may have to vacate your residence before you close on your new house. Finally, the closing may need to be postponed based on your seller’s needs. It is better for you to keep your lawyer fully informed about all of your circumstances about when you need to get out of your current residence so she can negotiate with the seller’s lawyer to fully protect your interests. You also want to ask your lawyer about progress she is making towards getting the closing authorization from the lender.