Thursday September 22, 2016
After touring through one home after another in search of the “just right” Goldilocks moment, you found it.
Then, your offer was accepted!
Now what? How long before you have the keys in your hand and a mortgage to go with it?
There are no hard and fast timelines, but there are some actions that need to happen along the route from accepted offer to homeownership.
How long does it take to close on a new home? Let’s take a look.
Let me start out by asking if you were pre-approved. I hope so. The worst feeling is to fall in love with a home, only to find out you can’t get the mortgage to buy it. Before you even browse listings, talk to a mortgage specialist and get pre-approved. Having the pre-approval letter when you shop will show that you’re a serious buyer with the purchasing power.
Your purchase and sale contract iis probably contingent on having a home inspection completed. Your Realtor can help you find someone to handle the job. Once the inspection is done, you should receive a detailed report within 24 to 48 hours. That inspection report will identify any problems that need to be addressed by the seller, prior to proceeding with the closing. Depending on the repairs, the seller might either have them done or simply reduce the price of the home to credit you for the cost.
If the inspection brings up a major problem, you have the right to walk away from the deal.
The lender will require a property appraisal, and will assign an appraiser to handle this task, at your expense. The intent is to protect you from paying too much for a home. If the appraisal comes back lower than the purchase price, the lender is not going to approve financing. You will need to re-negotiate with the seller, based on the appraisal. Allow up to two weeks for the appraisal to be completed.
Even though you’ve been pre-approved for a mortgage, you still need the lender to process the paperwork, which is known as underwriting the mortgage. In general, underwriting takes about one to two weeks.
During this step, you might receive any number of inquiries, such as recent bank statements, and letters of explanation for anything out of the ordinary the pops up on your credit report, like debt that went to collection. If you’ve been married or divorced, you might need to provide that documentation in order to verify a name change on your credit report.
Be advised: The lender will pull an up-to-date credit report on you when the mortgage underwriting begins, so if you’ve opened up a new credit card since your original pre-approval, you might not be eligible for the full mortgage amount. Do not tamper with your credit in any way once you’ve been pre-approved!
You will need to submit proof that you have secure homeowner’s insurance prior to closing. Do this as soon possible to avoid unnecessary delays. A simple call to your insurance agent can usually take care of it.
From start to finish, the timing for closing on your new home could require from four to seven weeks. An FHA or VA loan will tend toward the longer end of this range, because the government-insured loans require a bit more work on the lender’s part.
In the end, you will walk away with the pride and joy of being a homeowner!