While buying a house is exciting, it can take much longer than you might expect. First, you need to get pre-approved for a mortgage, next you have to find a home that you can afford that checks all of the boxes on your wish list, and then you have to handle the financial paperwork…along with several other tasks.
The time it takes to buy a house can vary, but on average, a homebuyer can spend a few days going through the initial pre-approval process, anywhere from a few weeks to months shopping for the right home, and 30 to 45 days to close the deal. Here’s a look at some of the different steps you’ll need to accomplish, to give you a real insight as to how long it takes to buy a house.
Saving up for a Down Payment
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 will offer 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.
Avoid taking out any new loans
Incurring any new loans or changing jobs could affect your eligibility for a loan. For example, lenders look at your debt-to-income 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.
Get preapproved for a mortgage
Getting preapproved for a mortgage shows that you’re serious about buying a house, and it also confirms how much you can borrow. To make their assessment, your lender typically will examine your assets, income and credit history. In particular, they’ll want to see documents such as recent pay stubs, two years of federal tax returns and two months of bank statements.
You’ll then 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 before getting preapproved can take longer, especially if you need to pay down credit card bills or fix errors on your credit report.
Start looking for a house
Once you’re preapproved for a mortgage, you can find a real estate agent and start shopping around for houses, since you know how much you can afford to spend. 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.
Negotiate a contract
Once you’ve settled on the house you want to buy, your real estate agent will help you put in an offer. By law, the seller must reply to your offer within 48 to 72 hours. The seller and buyer then could go back and forth negotiating terms, such as price and contingencies, which could cause a delay.
Schedule a home inspection
Once your offer is approved, the next step involves scheduling 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.
The closing process
Once the home inspection is completed, your lender will then move the loan into underwriting. At this point, you might 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.
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.