How Fast Can You Close on a House With Conventional Loan?

Loan settlementWelcome to our article! Today, we will be discussing the topic of how fast you can close on a house with a conventional loan. For many homebuyers, the speed at which they can close on a property is a crucial factor in the home buying process. With a conventional loan, there are several factors that can impact the timeline of your closing. In this post, we will explore these factors and provide you with insights on how you can navigate the process efficiently. So, if you're curious about the timeline for closing on a house with a conventional loan, keep reading to learn more.

Key Takeaways

  • According to recent data from ICE Mortgage Technology, the average time to close on a conventional mortgage loan is around 49 days, emphasizing the importance of understanding closing costs and processes in a home purchase.
  • Several factors can slow down or speed up the closing process, including your finances, property checks, and insurance checks.
  • Typically, conventional loans close faster than government-backed loans.
  • To close your loan faster, send your paperwork and work with a lender who responds quickly.
  • Learning about the conventional loan process and using intelligent strategies can make your home-buying experience faster and easier.

Understanding conventional loans

U.S. home buyers often choose conventional loans. These loans are not backed by a government agency but are obtained from private lenders. They usually require better credit and higher down payments than government-backed ones. Understanding these loans, their features, and their requirements simplifies the closing process for borrowers.

Definition and Characteristics

A conventional loan is a mortgage without federal government backing. It comes primarily from banks, credit unions, and mortgage companies. People see these loans as a usual go-to choice for buying a primary home, a second home, or an investment property.

Common Requirements

Conventional loans require a higher credit score and a larger down payment than loans backed by the government, making the days to close on a home longer for those without these prerequisites. It would be best to have a good credit score, usually around 620. Home buyers might need to put down as much as 3%–20% of the home's price. These loans also check your income, debt, and the home's condition closely. Being aware of these needs helps borrowers prepare for the loan process and makes the deal smooth.

Factors Affecting the Closing Time

Closing on a conventional mortgage loan takes time for several reasons, including thorough home appraisals and ensuring closing costs are covered. Knowing these reasons helps borrowers prepare for the closing process, making the closing day process smoother.

Borrower's Financial Situation

A borrower's financial status dramatically affects when they can close. Lenders check credit scores, incomes, and debts closely to ensure a smooth closing disclosure process. This determines whether the borrower can repay the loan. Those with solid finances might close faster. Yet, complex finances may lead to delays in the home purchase process.

Property appraisal and inspection

Property appraisals and home inspections are crucial for home purchase and are thoroughly reviewed. These steps confirm that the property's value matches the loan amount. We must resolve any inspection issues before closing. Delays in these steps can postpone the closing date. Appraisers may need up to 30 days to complete the appraisal, depending on their workload.

Underwriting Process

The underwriting process is also a bottleneck. When lenders find themselves in a refinance market and a heavy purchase market, the application can take time to move out of underwriting. Estimate 2 to 3 weeks.

Title Search and Insurance

Conducting a title search and obtaining title insurance is essential. Lenders need to ensure the property’s title is free of issues to secure a smooth home purchase. Resolving any found issues could potentially delay the closing. The title search and policy preparation can take up to three weeks.

How Long Does It Typically Take to Close?

The national average time to close for a conventional loan is 49 days. Yet, individual situations can make this number fluctuate. Things like the borrower's credit score, income, and debts play a role. Also, the complexity of the property's appraisal and title search can affect timing. How the lender processes its checks, including home appraisal and closing cost evaluations, adds to the closing timeline.

Ways to Expedite the Process

To make closing faster, borrowers can do a few things. Providing all documents early is a big help. 

It is also important to pick a quick and reliable lender. Dealing with problems promptly can keep things moving.

It can also be beneficial to consider a mortgage rate lock. This can lock in the current interest rate and help avoid delays from market rate changes.

Knowing about average closing times and acting proactively can help you close on a conventional loan faster, reducing closing days. This leads to a smoother home-buying process overall.

Comparison with Other Types of Loans

Conventional loans usually close faster than USDA, FHA, and VA loans. However, the timing can vary greatly depending on the type of loan and the lender. FHA loans especially take longer to close because they require closer scrutiny, impacting the days to close on a house. VA loans, insured by the Department of Veterans Affairs, also take longer to close.

According to ICE Mortgage Technology, the average time to close on a conventional loan is about 49 days, a bit shorter than FHA and VA loans, which close in around 52 days. But remember, these numbers are just averages. The closing time for any loan can vary a lot. It depends on factors like the borrower's finances, the property, and how efficient the lender is.

Knowing how long different loans close can help you choose the best mortgage. Whether you choose a conventional, FHA, or VA loan, having knowledge is beneficial. Make sure you understand the loan's closing process. Also, taking steps to speed up the closing can make buying your home smooth.

Here are some tips for a smooth and quick closure process

Want your conventional loan closing to be smooth and quick? Consider these easy tips.

  1. Be proactive with documentation. Collect all needed documents early, including income, tax returns, and assets. Hand them over to your lender quickly. This expedites getting your loan approved and prevents hold-ups.
  2. Select an Experienced Mortgage Lender: Look for a lender with a reputation for quick closings and excellent service. A skilled lender makes the home loan process easy. They can also solve problems quickly to adhere to the closing day schedule.
  3. Monitor the process closely. Keep in touch with your lender and agent. Follow the appraisal and title search closely. Tackling problems quickly helps your closing go smoothly.
  4. Consider a Mortgage Rate Lock: Locking in your mortgage rate is wise. It secures a reasonable rate, even if the closing process is slow. So, you will close at a rate you like.
  5. Maintain open communication. Regular talks with your lender and agent are key. This keeps everyone informed and helps solve issues. Good communication makes closing quickly on a home more likely, highlighting the importance of a closing day timeline.

Follow these tips for an efficient closing on your conventional loan. This can help ensure you close on time on your new home.

Conclusion: How Fast Can a Conventional Loan Close?

In conclusion, the speed at which a conventional loan can close is influenced by various factors such as the lender's processing time, the complexity of the transaction, and the responsiveness of all parties involved. By understanding these factors and taking proactive steps to expedite the process, borrowers can navigate the home buying journey more efficiently.

Whether you are a first-time homebuyer or a seasoned investor, being informed about the timeline for closing a conventional loan is crucial in ensuring a smooth and timely transaction. Stay informed and prepared to make your home purchase experience as seamless as possible.

FHA - HUD Handbook 4000.1
97% Loan to Value Options
Fas: 97% TV Options