Real estate agents and experts assure that they can close a deal in as little as two months, but in reality, the entire process must take as long as home buyers need. The timeline is contingent on a lot of factors, such as if you’ve settled any credit bills or if you’re dependent on the sale of your previous home to pay for the new house.
So, the age-old question remains: How long can it take to buy a house? The answer is, if you’re as well prepared as anyone, you can close the deal in as little as two months. Of course, this is assuming everything goes smoothly. Remember to maintain communication with key contacts, get ahead of the documents, and stay in control throughout the process.
Table of Contents:
1. Decisions for the type of payment
These are the options you have in choosing how to pay for the new house:
a. Cash
Homebuyers who are purchasing a property with cash reserves may see a deal closed in as little as two weeks, as long as everything goes smoothly: the inspection is done within a month, as are contract negotiations. If the cash offer is dependent on the funds from the sale of the previous home, the process will continue as soon as the old house is sold.
b. Mortgage
For many homebuyers, taking out a mortgage is much more achievable, albeit a slower process.
First, as with any sale, you will have to wait three weeks or more after making an offer to the homeowner in order to have the house inspected and schedule the authentication of the Purchase and Sale Agreement, among other steps.
Within one more month, the lender will issue a mortgage commitment after conducting an appraisal of the property and determining its value. Homebuyers are expected to submit documents proving assets and income, which are then evaluated. With a mortgage broker, you will be able to get a faster transaction alongside your real estate agent.
Keep in mind that, before your loan is approved, there may be additional requirements that you need to complete. The Integrated Disclosure rules may delay the procedure because it requires at least three business days after the submission of the documents to proceed to the closing.
Homebuyers can expect to get the keys around two months after making an offer to the seller. In between negotiations and house inspections, this will be the smoother part of the procedure.
2. Decisions for the type of loan
The type of loan you decide on will affect how long the home buying process will take, but generally you can complete this stage in one to two months.
a. Conventional loan
Possibly the smoothest transaction, a conventional loan can depend on good credit, stable employment history, and a sufficient down payment. Highly recommended by lenders, this type of loan is typically issued in the local area. Assuming everything goes according to plan, you can get your keys in as little as one month.
b. FHA loan
If you’re not too confident about your down payment or your credit, you may qualify for the Federal Housing Administration loan. Typically, this takes much longer than the conventional loan and may cost you one to two months.
c. Rural Development loan
If you have a limited income, you can apply and avail yourself of the Rural Development loan from the United States Department of Agriculture. These require more paperwork than traditional loans, and if you’re patient enough you can close a deal with the lender within two months.
d. VA loan
The Veterans Administration loan is available for specific groups of people, including veterans, members of the National Guard, reservists and active-duty members. This might also take you at least two months.
3. Property search for what you want in a home
Before anything, you need to identify what you want in a house, such as the type of property you’re looking for, its size, condition, and other considerations such as its distance from work or school. Another point to figure out is whether you’re planning on upsizing or downsizing.
At this point, you can visit open houses and get to know your market. Some homebuyers will seal the deal after looking at a few homes, but for others with more specific needs, it depends. Some buyers may have to tour up to 20 homes before they consider sealing the deal. As you have a good look around, grab the opportunity to narrow down the criteria of your dream property. Set up your online filters so you’ll be notified when there are new homes on the market that meet your criteria.
Finding a home might take one month at least, accounting for viewings and dependent on market conditions. Scheduling conflicts could delay the process. By the end of this part, you will have had done enough research on prospective properties online and have a complete idea of what you want the house to have.
4. Management of finances
Be sure to take down notes of your expenses, as it will affect your credit report. Analyze your credit profile in advance and find out what you can do to get a better interest rate. To avoid any discrepancies in the process, print copies of your reports and start paying off bills.
Remember not to use large loans, which may affect the debt-to-income ratio, which lenders use to determine your qualification for borrowing the funds.
Prior to this entire process, you must have already secured funds ahead of time for the down payment of the property. A good idea is to save two to five percent of the property price to cover additional costs.
By the end of this part, you will have had prepared your down payment, defined your budget, and readied your credit. It might take up to one month to track your spending and credit use.
5. Finding a good real estate agent
At any point in the process, you can contact a local financial adviser who is familiar with the functions and forms of the market. Find a real estate agent who can guide you through the home-buying process, particularly someone with intimate knowledge of the neighborhood you want to reside in.
The duration of this phase will be largely dependent on the performance and expertise of the agent, who will represent you and your interests for the purchase of the property. It’s time for you to bring out those saved searches online and show them to your agent, who can set up viewings of the properties. A real estate agent will connect you to other professionals, like home inspectors, real estate attorneys and mortgage lenders.
By the end of this stage, you will have hired a real estate agent. This will take at least one week.
6. Securing loan pre-approval
Most real estate agents recommend that homebuyers procure a pre-approval before starting the home searches and negotiating a contract with a seller. Let them choose a lender or find a mortgage broker for a smoother transaction.
As mentioned earlier, a mortgage is a long procedure. Expect a loan approval to take at least two months. Part of the process involves the lender evaluating your credit profile and approving the purchase of the property according to a fixed amount based on your financial status. The credit profile can consist of bank statements, pay stubs, or even tax returns.
Being preapproved increases the likelihood of closing the deal at an earlier time, because it’s a good way to show home sellers that you’re taking this seriously. By the end of this, you will have gotten a pre-approval letter and started scheduling appointments with the homeowners for showings. Generally, this is a process that can take from one to two weeks.
7. Negotiation of the contract
Make your offer as soon as you find the property that meets your criteria. The seller should give you a response within two to three days. The negotiation will involve lots of other contingencies and considerations that might delay closing the deal.
If your offer is approved, slate a home inspection, which may be done as soon as 10 days after signing a Purchase and Sale Agreement. Major items that are revealed during a house inspection may delay the process if it requires lots of repairs or seller’s credits.
By the end of this stage, you will have found a property to your liking, made an offer and negotiated a contract. This can take up to one week.
8. Property inspection and appraisal
During the escrow period, you will be expected to schedule the home inspection as soon as possible after negotiating the contract. You will needto complete it according to the details of the Purchase and Sale Agreement.
For the more exciting part, you can now contact the moving vans for your move to the new house. Don’t forget to visit the post office and inform them of your change of address. Make sure everything is settled before you actually move to the property.
As the details of your loan are being finalized, maintain proper communication with your mortgage lender. Be quick to submit the requested documents and notify your lender of your home insurance provider. Contact your real estate agent and real estate attorney to make some final arrangements.
At this point, your loan application will be verified by an underwriter, who will verify that your documents meet the lender’s requirements. In around one month you will have found a home inspector, done an inspection, and purchased homeowner’s insurance.
9. Closing the home purchase
Thoroughly inspect the property one last time before signing the closing paperwork at the title company’s office. A home buyer will sign the documents so that the property will officially be transferred. Sellers might give the keys at closing or they might wait until the transaction is on the registry of deeds.
By the end of this stage, you will have done a final walkthrough inspection, signed the closing documents and gotten the keys to your house. Depending on contingent factors, this may take up to one week. Once you’ve successfully navigated this process, you can, at long last, call the long-coveted property your own.
The bottom line is, you might already know the answer to your question, “How long does it take to buy a house?” As you might have already surmised, it’s completely relative. It’s relative to your credit profile; it’s relative to your real estate agent or mortgage lender; it’s relative to the sellers in the market! As we’ve outlined in the article, there are ways to speed up the process, such as settling your credit bills earlier and having your loans preapproved. An average buyer will need five months, more or less.
We hope you find this article helpful in clarifying the steps in the home buying process for you. If you do, please share it on your Facebook or Twitter page so other home buyers can benefit from it as well. We wish you all the best on your journey to buy a new house for you and your family.