How Fast Can You Close a Loan on a Home

By David Rouse

Most mortgages require between two weeks and one month to close. Sometimes lenders and other third party vendors accommodate a faster closing but, mortgage laws required specific timelines elapse during the mortgage process. These requirements are in addition to the actual work that must happen on a mortgage before a lender fully approves a loan and allows it to close. Many variables affect how fast a mortgage loan may close.

All time regulations occur in business days, not actual days. A lender may only count business days as days their business is normally open. If the lender conducts business on Saturday, then it may count, if they are closed it does not. Sunday is never included as a business day for any mandatory time frames. Legal holidays such as Thanksgiving, Memorial Day and Independence Day are also excluded from the legal time frames. If these days fall within the loan's processing period, they could lengthen the minimum number of days to close a mortgage.

The Mortgage Disclosure Improvement Act of 2008 implemented mandatory waiting periods between disclosing an application and closing a loan. Before 2008, lenders only had to disclose the loan's interest rates and fees within three days of loan application. Thanks to the MDIA, lenders must give the borrower at least seven days from the day the lender mails or provides the disclosures to the borrower. If the borrower applied for a loan on a Monday and the lender mailed the disclosures on Tuesday, the borrower would have Tuesday, Wednesday, Thursday, Friday of the same week and Monday, Tuesday and Wednesday of the next week before the loan could close. If the lender worked on Saturday, the loan could close on Tuesday.

If the borrower substantially changes the loan's term, amount or interest rate, then the lender must re-disclose the loan to the borrower and wait at least three business days before closing the loan. If the loan changed on or before day four of the initial disclosure period, then the loan could still close on the same day. If the change happens after day four, then the lender must delay the closing.

Owner-occupied refinance loans require the borrower and lender wait three days after the loan closes before the lender may provide the funds for the loan. This gives the borrower an opportunity to review the loan terms and rescind the mortgage without penalty. If the loan closes on a Monday, then Tuesday, Wednesday and Thursday are the rescission period, and the loan would then fund on Friday. The same weekend and federal holiday rules apply to this restriction as well.

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