Factors That Impact Home Closing Times
If you are a home seller, closing process time is critical for several reasons. You probably need to move from the home, you may be in the process of purchasing a second home or you may need cash for emergency reasons. While there are no state or federal regulations that govern home closing times specifically, there are certain requirements that a lender must meet in order to facilitate a home closing. These requirements also have specific time frames for implementation:
At the time of application:
RESPA and Regulation Z - Under Regulation Z (part of the Truth in Lending Act), a lender must provide a borrower with a Truth in Lending Disclosure (also called a Good Faith Estimate) form which explains clearly all of the fees associated with the mortgage transaction.
Mortgage Servicing Disclosure - A lender is obligated to disclose to the borrower whether they will service the loan or if they will sell the loan servicing.
Educational Booklet - HUD (Housing Urban Development) also has a consumer education guide that is required to be provided to borrowers who are purchasing a home.
These documents must be provided either at the time of application or within seventy two hours of application. They are not required if the lender is rejecting the application. For a seller, this means that a minimum of three (3) days will pass before a loan may be closed when they are selling their home.
Other factors that may impact the home seller closing process time include:
Home Inspections - While most states do not have specific laws that mandate a home inspection, it is unlikely that a home buyer will find a lender that will allow the mortgage to be approved without an inspection.
Appraisals - Some lenders may require not just one but two appraisals. This is especially true in areas where real estate prices may have been declining.
Documentation - Lenders may hold up a closing date in order to confirm credit reports, income and other pertinent information. This means that the seller closing process time is longer.