Need to know how long to close on a home in Babcock Ranch?
If you’ve been thinking about moving on up to the east side of Charlotte County, Florida, you’re likely familiar with Florida’s first solar community.
Spread across 17,000 acres, it sits right at the edge of northeast Lee and southeast Charlotte counties in Southwest Florida. Babcock Ranch’s master plan provides for nearly 20,000 residential homes and has a projected population of 50,000.
For those of you considering joining that population, one of the questions you may be asking yourself about buying in this community is about the closing process. If you’re selling a home, you might have questions about the closing process as well.
The answer to that question will vary depending on the type of sale and home. This post will go into further detail about the real estate closing process and those different situations and how they affect the closing date for your home.
What is Closing?
Closing refers to the stage in the home selling/home buying process when all the documents are signed, money changes hands, and important documents are transferred. It is the last step in the real estate transaction. The new owner receives the keys to their home at closing.
What is the Average Close Time?
In real estate closings, generally, anything that is a resale will have an average close time of about four to six weeks. New construction home closings are based on the home’s expected completion date.
What if I’m Paying Cash?
Cash buyers (people who don’t need a mortgage because they have enough money to buy the property outright) can normally complete the real estate home closing process in as quickly as two weeks. Or they can request to close within six to eight weeks. Most cash sale closes are done within thirty days.
Tips and Facts for Cash Buyers of Resale Homes
- If you’re asking for a cash discount and the seller has an urgent need to close quickly, they may be willing to negotiate a lower price in exchange for a quicker close on a house
- To streamline the funds verification process, the buyer can include this information in their offer letter or they can contact their bank for funds verification ahead of making the cash offer.
- Title searches go through a home’s title history and ensure that there are no outstanding liens or listed heirs on the title. While mortgage lenders purchase title insurance for themselves, buyers are encouraged to do so, as well. If they don’t, when the day comes for them to be sellers, if anything is discovered on the title that wasn’t found previously, they will be responsible for it before being able to sell the home.
- With aggressive offers, the inspection period can be within five to seven days. Even more aggressive offers will waive the inspection period. It’s recommended that an inspection be done since it could identify something serious that could impact the value of the home. The inspection can be completed in two to four hours and should let you know what you’re looking at in terms of repairs, upgrades, and permits.
- The valuation of the home, or appraisal, is optional in a cash deal, but it is a good idea so that you are sure your home is worth the full price of purchase. If the home appraises at lower than the purchase price, the buyer has the choice of whether to go on with the deal as-is or to renegotiate. Renegotiating would, of course, extend the closing timeline.
- Closing costs for buyers of resale homes are roughly 1% of the purchase price
New Construction Closing Delays at Babcock Ranch
If you’re closing on a house that is new construction at Babcock Ranch these days, you can expect a closing delay of six to twenty-four months depending on the builder.
The COVID-19 pandemic has brought major challenges for builders. According to a survey from the AGC (Associated General Contractors) of America, nine out of 10 firms said they are experiencing project delays. Three-fourths of respondents blame it on material shortages while nearly 60 percent blame it on delivery delays.
Florida Construction Labor Shortage Also a Factor
The AGC Survey also found that there is a labor issue with 94% of Florida firms having difficulty filling craft positions.
Florida builders are currently facing a critical shortage of workers. According to the National Association of Home Builders, in the past few years, the state has faced a shortfall of more than 14,000 construction workers. And that number grew to nearly 20,000 in 2021.
The lack of labor is already having an impact on new home starts and completions. In 2017, Florida ranked third in the nation for housing starts. By 2018, however, starts had fallen by 12%. And they’re projected to fall another 15% this year.
The current shortage of construction workers is having a ripple effect on the entire housing market. As new home starts and completions fall, buyers are finding that the closing process is taking longer than expected. In some cases, they are waiting six months or longer to close on a home.
What’s Causing the Construction Labor Shortage in Florida?
The decrease in new home construction is attributable to several factors. First, the state’s population growth has slowed in recent years. Second, the number of people leaving the workforce has increased. And finally, the cost of housing has risen faster than wages, making it difficult for many workers to find an affordable place to live.
If you’re thinking about buying a new home in Babcock Ranch, it’s important to be aware of the current shortage of construction workers in the state. While most builders are still able to deliver homes on time and within budget, some buyers may find that they have to wait longer than expected to close on their new home
How Long to Close for Babcock Builders?
Babcock builders are not impervious to the above market forces.
Buying a Pulte home? Expect to delay closing anywhere from 10 to 12 months, based on the model.
Are Lennar ranch homes more your real estate style? Expect your closing day in about six to eight months from the time you sign the contract. Meritage is also about eight months for a closing timeline.
The timeline to close on a house grows even more when we get into custom builders. For example, with Florida Lifestyle Homes you’re looking at a closing date of a year, maybe a little bit longer. Devco’s closing date is about 18 months out. Arthur Rutenberg Homes is asking for 24 months to build a custom home.
Along with the delays, you are also looking at the highest percentage in closing costs – about three percent for new construction homes in “the Bubble.”
How Long to Close on Mortgage Resales
For the buyer who is unable to make a cash offer, financing is available through a real estate loan used to purchase a home or a mortgage.
The fastest a loan officer can usually close a financing loan is about three weeks, with most financial deals taking about a month and some up to six to eight weeks.
This table breaks down the steps in the loan process after the loan application is submitted for better understanding.
Personal Loan vs. Mortgage Loan
When obtaining financing, you’ll want to know the difference between the types of loans and which one is best for you.
A personal loan can be used for pretty much anything and typically requires no collateral. For this reason, the interest rate on this loan is usually higher than a mortgage loan’s interest rate since the lender is taking a greater risk. Less appealing for home buyers is that even with impeccable credit, the maximum loan amount is only $100,000.
Generally, you wouldn’t use a personal loan for a home or real estate purchase. Loan terms range from one to seven years with the most common terms being three to five years. With its limitations, personal loans are better suited for home improvement projects, consolidating credit card debt, paying for a vacation or wedding or some other major purchase.
It’s not a good idea to use personal loans for money down. A mortgage lender usually will not allow this and prefers that you don’t get your down payment by obtaining financing through another lender. Lenders will question whether you can afford the house if you can’t afford the down payment.
With a mortgage loan, or home loan, the loan is considered secured because it is tied to the real estate property being purchased. The property is owned by the borrower in exchange for money that is paid in installments over time with the end goal being that the debtor eventually comes to fully and independently own the property once the mortgage is paid in full.
Once you’ve completed a mortgage application and received your loan estimate, you’ll probably notice that because it is secured, the home loan provides lower rates than personal loans. A loan estimate is a standard three-page form used by all lenders that includes important information such as estimated interest rate, monthly payment and total cost of closing.
Also, the loan term for mortgages is usually between 15 to 30 years.
FHA Loans and Conventional Loans
FHA loans are insured by a federal agency, the Federal Housing Administration. Conventional loans are not insured by a federal agency. See the table below for a comparison of the two types of buyer financing.
Rocket Mortgage used to be the online loan shopping and application process offered by Quicken Loans. As of July 2021, Rocket Mortgage is the lender’s official name. Rocket Mortgage offers a wide range of both purchase loans and mortgage refinance loans, including government-backed mortgages. However, it doesn’t offer construction loans, home equity loans, or renovation loans.
Rocket Mortgage currently offers:
- Conventional mortgages
- VA loans
- FHA mortgages
- Jumbo loans
- Fixed-rate loans
- Refinance loans
Things That Can Delay the Closing Process
There are quite a few factors that can cause a delay in the closing process, such as:
- Low appraisal – the real estate property appraised at less than the sale price. This may cause the buyer to back out or lose funding; buyer may try to negotiate lower price
- Discoveries during the final walkthrough – depending on the find, it could be serious enough to cause closing delays. You may need to ask your real estate agent for help getting the seller to make repairs. You can hold back funds in escrow until the agreed-upon repairs are completed and you’ve signed off on it.
- Lenders requesting more information or documents at the last minute
- The buyer needs more money to close
- Seller/tenant hasn’t vacated the property (hence why a final walkthrough is so important) – closing is either delayed or a significant portion of funds is put into escrow until sellers complete the move. If a seller wants to stay in the home after closing, the buyer and seller should have a written agreement setting out the expectations for that post-closing possession between the parties.
- Title search uncovers a lien on the property. A lien is a legal claim on assets that allows the holder to obtain access to the real estate property if debts are not paid. Liens must be resolved in order for the close to move forward.
- Errors in final paperwork – could be as simple as misspelled names or as important as incorrect loan details. By law, you will receive Loan Estimate and Closing Disclosure forms three days before the actual closing day. Preview these beforehand for errors to avoid any delays.
Tips for a Smooth Closing
There are things you can do before the real estate closing process begins and during the process that will ensure that it goes through smoothly.
Before You Click Your Heels
First, get conditional approval before making the offer. Getting pre-approved for a loan will help you determine how much you can afford and give you a realistic expectation of the price range for your new house. Buyers who have been pre-approved by a lender are generally those who are able to finalize their loan application faster and more efficiently than ones who have not been pre-qualified.
It’s All About the Paper (Not Just the Benjamins)
Get your documents together. Gather your bank statements, pay stubs, tax returns and other documents as soon as possible — even before you begin looking for a house to buy. Often, getting these documents together takes time. The better you prepare, the faster your loan will be approved — and processed.
If you are unsure of which documents you need, ask your local bank for a “home loan checklist.” Most lenders post these checklists online, and they will readily give you a guideline of what you will need to provide.
Work with an experienced mortgage lender. Whether you use a mortgage broker or work directly with a lender, ask what the average time is for processing a loan application and, specifically, how quickly they will be able to complete your mortgage. Try to anticipate potential setbacks, like any credit or employment-related problems you know exist and ask what you need to do to clear those up.
An experienced real estate agent like me will also add to a better experience in the home buying and home closing process.
Better Have That Money!
Make sure that you have the money for the closing costs. The lender will require proof that you have sufficient funds for the down payment and costs of closing prior to closing. Be sure those funds are readily available, and be prepared to wire or present a cashier’s check on the day before closing.
This Needs Fixin’
Create a timeline for any repairs the seller is obligated to make. Make sure any repairs the seller has agreed to make are completed on time — ideally, at least several days before your scheduled closing. Do the final walkthrough inspection the day before closing, or sooner, if the seller agrees.
Contact your lender on the day before and on the day of closing. As we now know, lenders notoriously ask for information at the last minute — a copy of a canceled check, proof of insurance or a recent bank statement.
A day or two before closing, contact your lender and ask if everything will be ready for the closing date. On the day of closing, verify with your closing agent that the loan documents have been received. If not, ask what is causing the delay and if there is anything you can do to help speed things up. Often, it is a case of just one missing document or one final verification.
Need a Realtor Who Knows Babcock Ranch?
If you want an experienced and knowledgeable realtor to represent you during the sale or purchase of your Babcock Ranch home, get in touch or call/text me at +1(941) 916-2859. I live in Babcock Ranch and know the community like an ace in the hole!