Buying a house is thrilling, but it can take a lot longer than you might expect. Think of all the financial hoops you’ll need to jump through before you get the keys, not to mention finding a home you can afford that checks all of the boxes on your wish list.
If you’re wondering how long it takes to buy a house, the answer is it depends. On average, a homebuyer can spend a few days to go through the initial pre-approval process, anywhere from a few weeks to a few months shopping for the right home, and 30 to 45 days to close the deal.
The timeline can go faster or slower depending on what your local market is like, your financing situation, the number of homes for sale in your price range, and even the time of year you’re searching.
“Usually the buyers that have ‘window shopped’ previously, whether it’s online or attending open houses, are more motivated,” says Jessica Soetan, a real estate broker with Premier Midwest Realty in South Holland, Illinois.
There are many moving parts involved in buying a house that knowing what could expedite or delay any part of the process. Understanding different factors will give you a realistic insight as to how long it takes to buy a house.
How long does it take to buy a house? A step-by-step guide
To map out your home-buying timeline, here’s a closer look at each step along the way:
Getting preapproved for a mortgage
Getting preapproved for a mortgage shows that you’re serious about buying a house. It also confirms how much you can borrow. Lenders typically ask for things such as your assets, income and credit history to make their assessment. You’ll receive a loan estimate within three business days after applying for a mortgage that outlines your loan amount, interest rate and other loan details.
Cleaning up your finances in order to get a preapproval can take longer, especially if you need to pay down credit card bills or fix errors on your credit report.
Here’s a general timeline of what you’ll need to prepare before submitting paperwork:
- At least six months beforehand: You’ll want to start saving up for a down payment (if you haven’t already) so you can show a lender you have the means to purchase a home. Also, try to get a broad picture of your financial situation such as checking your credit report and score. A credit report gives you insight into your borrowing history, how much you owe and whether you pay your bills on time.If there are any discrepancies, you can get those resolved before getting preapproved. That’s because lenders will look at your credit history (and, by extension, your credit score) to see how creditworthy you are. Understanding what’s in your report now will give you a chance to raise your credit score so when it comes time to get preapproved, you have a better chance of landing a better rate.
- Three-to-five months beforehand: During this time, avoid taking out any new loans (or other major changes such as changing jobs) because doing so could affect your eligibility for a loan. For example, lenders look at your debt-to-income, or DTI, ratio to see whether you can afford to manage your monthly payments. You’ll want to keep the status quo in your finances, income and job situation through closing to avoid delays in your loan approval.
- One-to-two months beforehand: This is a good time to figure out what paperwork you’ll need to submit for a preapproval. Documents typically include recent paystubs, two years of federal tax returns and two months worth of bank statements. Consider speaking with several different lenders to find out what you may qualify for, including any homebuyer programs.
Finding a home
Once you’re preapproved for a mortgage, you can start looking for a house since you know how much house you can afford. At this stage in the process, you can find a real estate agent and start shopping around for houses.
The house-hunting process can go faster or take longer, depending on your desired location, season, buying competition and available homes for sale that match your criteria.
“Most of my clients look at around six homes before making a decision, but for clients who are really specific with their needs, it can be up to 20 homes,” Soetan says.
Negotiating a contract
Once you’ve found the house you want to buy, your real estate agent will help you put in an offer.
“By law, the seller must give you a reply within 48 to 72 hours,” Soetan says. “The seller and buyer can go back and forth negotiating terms, such as price or other contingencies, which could delay an approval.”
If your offer is approved, the next step is for you to schedule a home inspection. Depending on your state’s laws, a home inspection typically needs to be completed within 10 days after you sign a purchase agreement. If any major concerns crop up after the home inspection, it could take more time to negotiate repairs or seller credits.
“Where I live, many homes still have septic tanks that need to be tested prior to a house sale,” says Jennifer Mattson, a buyer’s agent with Nest Real Estate in Manchester-by-the-Sea, Massachusetts. “I had one home where a new tank needed to be installed, and it delayed the closing by three additional weeks.”
The closing process
Once the home inspection is done, your lender will then move the loan into underwriting. You may need to submit additional documentation for your lender to clear your loan to close, and the lender will order an appraisal to assess the home’s value. It can take anywhere from 30 to 45 days to close a loan, depending on the lender and your loan program’s requirements.
Depending on the type of loan you take out, it could take slightly longer because of the types of assessments and paperwork needed.
“Although the buyer may already be preapproved for financing, once an offer is accepted on a property, the home is then assessed to see if it can be financed,” Mattson says. “The lender needs to perform a series of steps to ensure this is a good risk for them.”
For example, an FHA loan or VA loan can take a few extra days to get final approval because of additional documentation that is needed. And if there have been major changes to your financial situation since you were preapproved, your loan might be delayed as well.
Once your mortgage is approved, your lender will give you a copy of your closing disclosure at least three business days before the closing date. The closing disclosure lists all of the loan details, fees and terms, as well as what you’ll need to pay in closing costs to finalize the purchase.
Bottom line
When asking yourself “How long does it take to buy a home?” the answer, as you can see, isn’t precise. The earlier you get a head start on ironing out your finances and credit, as well as securing a preapproval and saving for a down payment, the better your chances are of ensuring you’ll have a smoother and quicker transaction.
source: http://www.bankrate.com/real-estate/how-long-does-it-take-to-buy-a-house/
