Finding a property you love, and having your offer accepted, are both major milestones in today’s competitive housing market.
You may be wondering why it takes a while to get your loan application processed and ready for loan closing and funding, but rest assured your real estate agent and lender, and their staff will connect with you as the need arises.
So what’s going on? And what’s happening next? There’s plenty of activity happening behind the scenes, and your real estate agent, lender, or title company rep will be in touch as needed until the loan closes. However, if you have questions, don’t hesitate to reach out. They want to make sure you get the financing and home you’re seeking.
How Long Will It Take?
You can expect your application-to-loan closing process to take about 40-50 days, though the actual closing (document signing) takes no longer than a few hours. Why the disparity? Putting together the documents necessary to close on the loan and transfer ownership of the property to you is a multistep process. The time needed also depends on your loan type.
Conventional loans – such as those sold to Fannie Mae or Freddie Mac – tend to close faster than other loan types because they follow a more traditional, straightforward path from application to closing. They generally do not include specialized underwriting, appraisal, or approval requirements beyond Fannie Mae or Freddie Mac’s rules and guidelines.
FHA loans operate on a similar timeline. However, additional time may be needed for some parts in the process, such as appraisals done by FHA-approved appraisers. If there is a backlog for their services, your loan may not close for a few additional days.
Generally speaking, VA Home Loans can take a little longer to close than conventional or FHA loans due to the VA’s stricter underwriting and appraisal requirements. This timing varies by lender and based on time to get the appraisal completed by a VA-approved appraiser.
Your closing may also be delayed if repairs on the property are needed and the repairs require re-inspection by a professional.
Related: Comparing Appraisal Requirements for VA, FHA, and Conventional Loans
Step by Step
Knowing that your application-to-closing process will take a few weeks, here are some steps you can anticipate. They don’t necessarily happen sequentially, and some will take more or less time than we’ve outlined:
Step 1 – Deposit (3-5 days). After you've signed the purchase contract, you’ll need to submit an earnest money or "good faith” deposit. Your real estate agent will typically take a check from you and deliver it to the listing agent with your offer to be put into an escrow account managed by a third party. When you close, the money will be applied to your down payment. However, if you break the terms of the purchase contract, the seller may be able to keep your deposit.
Step 2 – Title search (2-3 weeks). A title search ensures that there are no issues with transferring the ownership of the property to you. Depending on the rules in your state, you'll either contract with a title company or real estate attorney to do the work. The cost for the search and title insurance will be paid at closing.
Step 3 – Inspections (7-15 days). As the buyer, you'll want to schedule any inspections that you included in the purchase agreement. Once they're completed, you'll receive a report you can use to ask the seller to make any needed repairs. The seller can have the repairs done, or not. If they won’t make a repair you feel is essential to safety, you may choose to walk away from the agreement. However, always be sure to check with your real estate agent or attorney regarding your obligations based on the offer and purchase agreement – keep in mind that these can vary a lot based on state laws.
Step 4 – Appraisal (7-10 business days). If you're using a mortgage to purchase the home, your lender will require an appraisal to ensure you’re not paying (and they’re not lending) too much. The lender will contract with the appraiser, but you’ll pay for the appraisal. If the appraisal comes back at or above the purchase price in the contract, you're good to go. If it comes in too low, you may need to try re-negotiate the price with the seller or add to your down payment.
Step 5 – Conditional approval (2-4 weeks). When your loan application goes to underwriting, an underwriter will vet your finances. The lender is trying to approve the loan so it’s likely you’ll be approved, or approved “with conditions,” meaning you’ll have to meet certain conditions (like providing a new bank statement) to get final approval. You'll want to do your best to resolve any conditions as quickly as possible.
Step 6 – Final walkthrough (1-2 hours). A day or two before closing, you'll conduct a final walkthrough. During this visit, you'll want to make sure that any agreed-upon repairs were completed and that all of the seller's belongings are gone. Around the same time, your lender will provide your closing disclosure that outlines the terms and costs of your loan, including how much you’ll need to pay at the closing.
Step 7 – Closing (2-3 hours). On closing day, you'll bring a cashier's check (or have funds wired) in the amount listed on your closing disclosure statement and sign your final documents. After closing, the escrow agent (e.g., attorney or title company) will distribute the funds to the appropriate parties and file the title transfer (change of ownership) with the recorder’s office in your county.
We’re Here to Help
Whether you’re just thinking about buying, ready to start home-shopping in earnest, or thinking about refinancing, an AMS Military Mortgage Advisor will be happy to provide you with an honest and fair comparison of your mortgage options, including a wide range of low-rate and low-cost mortgages designed to meet your needs.
Ensuring our Members obtain the best mortgage possible is our mission. Get your free mortgage assessment today or give us a call at 844-244-0564!