Owning a home is one of the most exciting milestones in a person’s life. But, it can take much longer than you might expect to buy a house, and this can derail your plans or have you scrambling for somewhere to stay.
Think of all of the paperwork you fill out and the hoops you jump through before you get your keys. You’ll have to search for a home in a good location that meets your budget, and your new home should have almost everything on your wish list. Of course, you need to meet financial criteria too.
So, how long does it take to buy a house? There’s not a hard-and-fast rule. The conventional wisdom today says that closing on a home can take roughly 50 days. This doesn’t include the preapproval process, shopping for a home, or negotiating the price.
The timeline can fluctuate depending on the market, your budget, your bank or mortgage company, and the seller’s flexibility. We’ll list the more time-consuming processes that come with buying a house, and you can use them as an approximate timeline on which to base your home buying journey.
Step by Step Process
Having an outline of the biggest factors that impact buying a house can give you a good idea of how long it will take to get through each step of the process before you finally get your keys. We’ll break them all down into a step-by-step process below.
Step One: Mortgage Preapproval
Before you start to shop for a home, you should have a preapproval letter from your chosen financial institution. This will give you a property price range, based on your income and other major expenses. The last thing you want to do is find a gorgeous house and discover that it’s way out of your range. Also, many sellers are not interested in negotiating with buyers who are not preapproved.
Your lender will require you to fill out an application. The application will ask for your income, assets, expenses, and credit history. Once you formally apply, the lender will send you a loan estimate within three to five business days that outlines your interest rate, amount, and any other relevant details.
Before you submit your paperwork, you should start preparing for it at least six months in advance. If you have to clean up your finances before you apply, this can take even longer. However, the following timeline outlines what you need to do before you fill out a mortgage application form.
Six Months Before You Apply
Give yourself at least six months to start saving up for a down payment on your home. A down payment will show your lender that you have the means to buy a house. This is also the point where you take a hard look at your finances and credit score. You can pull a free copy of all three credit reports once a year from annualcreditreport.com.
This credit report will outline your credit history, detail how much you owe, and will tell a lender whether or not you pay your bills on time. If you see incorrect information, resolve it before you apply. Your lender will look at this credit report and credit score to determine your loan amount. The better these two things are, the better your chances of getting a good mortgage rate are.
Three to Five Months Before You Apply
In the three to five months before you apply for your mortgage loan, avoid taking out any new loans. Doing so can negatively impact your ability to get your mortgage loan. Lenders take a hard look at your debt-to-income ratio to see whether or not you can afford the mortgage payments. You’ll want to keep your job, income, and finances stable throughout the closing process to avoid costly delays.
One to Two Months Before You Apply
During these two months, start gathering up all of the paperwork you’ll need to submit to the lender to get your preapproval letter. These documents will typically include two years of federal income tax returns, pay stubs or direct deposit forms, and two months of bank statements. Consider shopping around for lenders to find out what you qualify for, and consider home buyer programs. These small things can help you save money.
Step Two: Start Your Home Search
Once you get your preapproval letter and know how much the bank trusts you to borrow, you can start shopping for your home. To start, consider the location and anything that is important to you. If you have or are planning on having kids, how are the school systems? Are they far from your home? What about work? Will it lengthen or decrease your commute?
Also, are there any houses in your desired area that meet your budget? If you require special accommodations, such as wheelchair access, will you be able to modify the house? How many bedrooms and bathrooms do you need? Do you need a garage or a fenced yard for pets? You want to answer all of these questions beforehand, so you have a clear picture of what you do and don’t want in a house.
This is the part of your search where you may want to talk to a licensed real estate agent that knows the area. They’re able to look through hundreds of listings to help you find the home of your dreams. Additionally, a local agent will be able to answer every question you have about the area. How long this step takes can vary from a few days to a few months, depending on how specific your needs are and the amount of properties for sale in your area.
Step Three: Put in an Offer and Negotiate
When you find your dream home, it’s time to put in an offer, which could mean having to negotiate with the seller. Once you tender an offer, the seller has between 48 and 72 hours to get back to you. They can accept or reject the offer, or you can go back and forth to negotiate a price and any contingencies, such as passing inspection (see below).
This can be very time consuming, especially if you go through multiple rounds of negotiations regarding repairs to the home and appraisal costs. A lot of sellers won’t typically accept the first offer they get, and you’re most likely competing with other prospective buyers at the same time.
Step Four: Approval and Inspection
If the seller accepts your offer on their home, the next step is to schedule a home inspection. Depending on where you are and your local laws, you’ll have to have an accredited company complete the inspection within 10 days of signing the purchase agreement.
Should the home inspection turn up major concerns, you’ll have to go back to the seller and negotiate for seller credits or repairs. The seller may also want to perform their own inspection. If they do, this can further delay the buying process by a few days or weeks. Another potential delay is if the seller agrees to fix any major areas of concern, like a septic tank, before they sell. This could add weeks to the buying process.
Step Five: Closing
The final step of the home buying process is closing. When you finish with the home inspection and come to terms on the inspection results, you can move the process to loan underwriting. At this step, the mortgage lender will assess the home’s value and order an appraisal of the property to make sure your loan is commensurate with the property’s value.
At this stage, the lender may require you to submit more documentation to clear your loan to close it. Depending on the loan and lender, closing can take between 30 to 50 days from start to finish. Certain loans have a longer closing process because they need different paperwork and assessments to fulfill the mortgage program’s requirements.
Even though the lender already gave you a preapproval letter for financing, they’ll have to formally assess the home once the seller accepts an offer on the property to ensure they can finance it. The lender uses this process to decide if this is a good risk for them or not.
For example, if you go with a VA or FHA loan, the closing process can take longer because they require a lot of additional documentation. If you had large changes to your financial situation between preapproval and the present, like starting a new job, this can delay your loan.
However, when your lender approves your mortgage, they’ll give you a copy of your closing disclosure three days before the closing date. This disclosure will list all of the loan’s details, terms, and fees. It will also outline what you need to pay for closing costs to finalize the purchase of your home. Sometimes the closing costs must be paid separately, and sometimes they are rolled into the loan.
The final step is doing a last walkthrough of the property before signing the paperwork. This is especially important if you requested repairs. When you finish with your walkthrough, you’ll go to the title company’s office and sign all of the paperwork. This could take a few hours, depending on how complex your situation is.
How to Avoid Delays When You Buy a House
Now that you know how time-consuming the home buying process can be, you want to do everything possible to avoid any unnecessary delays. Buying with cash can speed up the entire process, but there are a few things you can do with financing as well:
Buying a home can be a huge expense, and many buyers find themselves caught unprepared for all of the expenses that come with buying a home. For example, you should have 10 to 20 percent of your total purchase price ready to go for a down payment. The more money you have for your down payment, the better it’ll look to your lender.
Another cost many people forget is closing costs. The buyer typically pays these costs, and they range between two and five percent of the total purchase price. Ideally, you’ll have the down payment and closing costs separated in different accounts and ready to go before you start shopping.
Get to Know Your Intended Market
Is there an area you absolutely could picture yourself living in? Most people know the neighborhood where they want to buy their house and put down their roots. Once you settle on a place, start to get to know the local market. Again, this is where a savvy real estate professional could help you.
Visit open houses in the area to get a feel for the prices, home types, and features you want to have in your home. Take a tour or two of the neighborhood at different times of day. You can even set up viewings with a local realtor and ask them to show you a broad range of homes. Ask about prices and selling trends. Not only will this give you a good idea of what’s available, but you’ll get a reliable price range.
Communicate With Your Team
You’ll have to shop for homeowner insurance at some point, and it’s critical that you keep the lines of communication open with everyone one your team throughout the buying process. Stay in touch with the lender, and be very prompt in submitting any further documentation they require. Let your lender know the entity you chose for your home insurance.
Prepare for the Move
When you get into the home buying process, moving can go very quickly. If you intend to use a moving company, keep them in the loop. Let them know when the seller accepts your offer and you complete the inspection. Let them know when you move to the closing process, and give them a projected date when you’ll use their services. Usually, you’ll have 30 days to vacate your property and get into your new one.
If you’re renting now, make sure your landlord knows that you’re actively looking to buy a house. Most landlords require 30 days’ notice that you intend not to renew your lease. Make sure your current lease doesn’t lock you in for more months, as this can get very expensive.
Contact RI Home Store for Assistance!
If you’re ready to buy a house, contact us. RI Home Store is ready to walk you through every step of the home buying or selling process. We’ll answer your questions, address your concerns, and help you find your dream home today!