Getting your offer accepted is a very exciting moment. In this market, most buyers have already experienced the heartache of rejected offers and bidding wars before going under contract. It's a relief for the end to be in sight but you need to be familiar with the timeline after acceptance.
There are a lot of moving parts in real estate, so timing can be tricky. For buyers obtaining a mortgage, the process generally takes 30-60 days, but there are numerous factors that can delay closing. You should discuss these possibilities with your Realtor in order to prepare if your purchase takes longer than planned. Here are some things to consider:
1. If you're renting, when does your lease end? Make sure you know when you get possession. How does this align with the last day in your rental? Do you have options for temporary housing? If your lease is active well past your possession date, can you afford to break your lease or pay both your rent and mortgage? (Keep in mind, your first mortgage payment will be due on the 1st after a full month from closing. So if you were to close in March, your payment will be due May 1st— not April 1st.)
2. If you currently own, you need to have a detailed plan in place with your Realtor, especially if your purchase is contingent on selling.
turn in the earnest money
Earnest money is a good faith deposit that is typically held by the title company or your Realtor's broker. The earnest money deposit is sometimes collected at the time you make an offer, but more often you need to turn it in within 3 days of acceptance.
inspections
Your contract states how long you have to perform inspections. On average, buyers request 7-10 days. It's important to schedule inspections ASAP. If you set them up toward the end of the inspection period, you risk not finding an inspector in time or making a rushed decision.
During your inspection period, you have the opportunity to renegotiate terms or ask the seller to perform repairs. Your Realtor will write an inspection addendum that must be sent to the seller by the final day of your inspection period. Once it's delivered, the remediation period begins. In our area, the deadline for the remediation period is 5 days after the seller receives the inspection addendum. If the parties don't come to an agreement, the contract can be terminated.
Altogether, the inspection process is typically completed within 15 days from acceptance.
appraisal
Lenders require appraisals to determine the home value. Ideally, your lender will order this within a few days of going under contract. The US is experiencing an appraiser shortage which means longer wait times. You can help stay on track by asking your lender if they need any additional documents from you before ordering it. Generally, you can expect the appraisal to be complete within 2-3 weeks after acceptance.
financing
While you deal with inspections and negotiations, your loan officer will be working on your file. Once they have everything, they'll submit your documentation to underwriting who then determines whether you're approved or if more info is needed. It's important to respond to lender requests as quickly as possible. This is often the stage where deals get held up, so urgency is crucial. If additional information is requested, ask your loan officer for clarification if you're unsure of what they need. It's better to check with them first rather than find out days later that you submitted the wrong documents.
The financing timeline will vary depending on your lender, how quickly the appraisal is turned around, and the complexity of your situation. Last year, mortgage data firm Ellie Mae reported that 51 days is the average time to close on a home purchase. To avoid delays, have your financial documents ready. Here are some of the items you should be prepared to submit to your lender:
closing disclosures
Once you're approved and the lender has given a clear-to-close, you're almost done! TRID guidelines, regulated by the Consumer Financial Protection Bureau, state that a lender must provide the buyer with Closing Disclosures at least 3 business days before closing. This gives the buyer time to look over the final terms and costs associated with the loan.
Early in the process, you will receive a Loan Estimate that you should compare to your Closing Disclosure. While these two documents may not have the exact same figures, there are strict rules on what costs can change. Check the guidelines here. If you think there are discrepancies, contact your loan officer.
After you have a clear-to-close, the title company will be in touch to schedule. They will also let you know how to provide funds. At this time, you should ask your Realtor when to schedule utility transfers.
closing
Don't forget your ID! Most closings take less than an hour and it's not uncommon in our area to have a round table closing, which means all parties sign together in the same room. If you get keys at closing, congratulations! You're done! If you have to wait for possession, congrats! You officially own the home and will be moving in soon!
It's important to have an understanding of this timeline so you know what to expect and what you can do to keep your purchase on track. If this seems like a lot to remember, don't worry! Your Realtor will help make sure that deadlines are met. As long as you follow their instructions and have clear communication with your lender, the process will be a lot less daunting. Now, get out there and get under contract!