How many times have you thought about purchasing your own home? Probably, many. If you have stopped by any open house in person or browsed houses online, you have already started passing home-buying.
But do you know the required time for the home buying process? Even if you do, you can brush up on the information through this post so you don’t miss out on something important.
Homeownership is something that can help you have a sense of financial freedom. So, knowing the timeline for buying a house is helpful. Thus, we have explained the home-buying timeline in detail so you can plan accordingly.
How Long is Home Buying Timeline for Most Buyers?
Honestly, it’s a tricky question because predicting can be difficult. Depending on multiple factors, you could take somewhere between four weeks (minimum) to six months to complete the home buying process properly.
If you want to shop for and close on a home in less time, you need to make a strong offer right away in the market. However, if it’s difficult to find the right place, you can make slower decisions.
After you have decided to buy a house, the first thing you need to do is get a pre-approval mortgage. The good news is that buyers can be pre-approved a day. Then your actual house hunting starts, which can last for weeks.
In fact, it’s the shopping step that gets stretched in the entire home buying process. A study has revealed that half of the homebuyers can find a desirable home in less than 3 months. But around 13% of home buyers require up to a year to find a good house.
Once you find a good home, you submit an offer, and the contract starts. Usually, it takes somewhere between 49 days to complete the process give down payment, after which you get the keys. From the time you have decided to buy the house to actually moving in the new house can take four months or longer.
This time frame varies because different home lenders work at different speeds. Some can complete the process before the expected time, while some take longer. Also, some buyers take longer to choose a home. And some sellers take more time to accept the offer.
It is a lengthy process that can get delayed at any stage.
Here’s a Step-by-step Home Buying Process Timeline
Below you can find quick information about the steps that need to be followed and the time required to complete every process.
The Planning Stage (1 to 3 years before actual purchase)
As excited as the thought of buying a house makes you, it’s equally stressful. Buying a dream house is not something you can just wake up and do. It needs planning. It needs savings.
Once the idea of buying a house starts to appeal to you, it’s the right time to start your hunt. At this stage, you can begin the planning phase. Honestly, if you want to buy a house of your dreams where you can live happily with your family and loved ones, you should spend at least a year getting ready before starting the homebuying fray.
During this phase, consider the below-mentioned things:
Decide Whether You Should Actually Buy a House
Buying a dream house sounds fascinating, but purchasing is not always the right step. This is why it’s important to consider whether to buy a house or continue renting.
For this, you need to know about the cost of buying vs. renting in the area you want to live in. Also, for how many years will you be living in the house? If you are a professional, which requires you to move every few years, buying a house would not be the right decision. But if you are willing to stay in the same locality for a long time, you can buy a house.
Lastly, whether you have a stable income or not. If you have a stable income, you can pay the mortgage amount. But if your income is not stable, taking a mortgage might be a bad idea.
Figure Out Your Budget
If you have decided to buy a house, you can then move towards figuring out your budget. By digging into your finances, you can know your spending limit.
There might be several ways to buy the dream home, but the mortgage lenders want to know whether you can pay back the mortgage. Also, the lender will try to know if you have any previous debt. For this, you need to have a good debt-to-income ratio, i.e., DTI.
Calculating DTI is simple. You need to divide your total monthly debt payments with your gross monthly income. The debt you should calculate includes student loans, child support payments, car loans, credit card debt, and mortgages.
In case you have other active loans, a good tip is to pay off some loans to increase your chances of getting a mortgage. But if you don’t have taken any previous loan, directly divide the mortgage amount with monthly gross income. This way, you can understand your monthly mortgage payment.
Make sure your DTI ratio is below 45% so that you can become a good candidate for a mortgage. The mortgage amount you quality is important. However, if it’s not sufficient to buy a house in the area where you want, explore other areas as well.
Clean your Credit
A bad credit score can destroy your dream of buying a house. Thus, you must clean your credits. What happens is that when you have an iffy credit history, the lender is likely to charge you a higher interest rate on your mortgage. Or, in the worst case, you might be denied a mortgage altogether for a bad credit score.
But you can improve your credit score. You will, however, need time to do so. To clean your credit, get a credit report. Review the report thoroughly. If you find any error, dispute the information. But you can’t remove actual negative information from your report.
- Pay your bills on time. You can even set an automatic payment reminder.
- Pay the down balances and clear them before applying for a mortgage.
- Lastly, don’t add new accounts.
Start Saving for Your Future Home
The amount you save can determine what kind of house you can afford in the future. That means you need to sort your finances in a way that can help you save a maximum amount for your future house. The better you save, the more you accumulate.
Explore Special Programs
If you are left with little money after cleaning your credit and paying the debt, there is one thing you can do. You can explore special programs that different agencies run.
You can search for payment assistance in your city or state. Also, you can take the help of government housing agencies, real estate agents, and banks.
Get Pre Approved of a Mortgage
At last, you need mortgage pre-approval, which takes somewhere between 1 to 3 days. You can consider this step the last set-up before getting into the “actively looking” part of home buying.
To get pre-approved for a mortgage, you are required to submit your paperwork along with the mortgage application. The lender will then verify the details.
The advantage of getting a pre-approval letter is that it helps the sellers to have more confidence in you. That’s because a pre-approved mortgage assures them that you will get the home loan.
Find a Real Estate Agent (1-2 weeks)
Once you start finding real estate agents, you have officially entered the “actively looking” phase. An interesting thing about a real estate agent is that he can become your personal navigation system to find the best homes in the area. But for this, you need to team up with a good real estate agent.
If you want to work with a reliable real estate agent, make sure you know the area well where you are planning to buy the house. A good number of experiences of working with customers is also appreciated.
Make sure you do good research, come up with potential questions, and check the customer reviews. Also, if you want, ask for recommendations.
Navigate Open Houses
If you want to understand the neighborhood market well, you must navigate open houses. This way, you can see what will come in your budget.
Determine Good Price Offer
After seeing the open home options, you can sit with your real estate agent to determine a good price offer.
Make a List of Things and Start House Hunting (up to 10 weeks)
A good real estate agent can become your navigation system to find the best homes. But it’s you who has to decide the things you need in the new house.
So, start by making a list of how many bedrooms you need, locality, short commute, and similar things. Along with this, list things that you want but could do without, like a hot tub.
You can then discuss this list with your broker, who will keep your priorities on the top while looking for a house. But remember that you would not quickly and easily find a home that caught your attention.
That means the home search process can get extended to around 10 weeks. No matter how much time it takes, you should never settle for less because you will find your dream house one day.
Make an Offer (3-5 days)
After you have found a house where you want to live with your family, make an offer. And once you have submitted the offer, the actual nail-biting begins. Sellers don’t reply quickly. Thus, you need to wait for the seller to accept, decline or negotiate the offer in about 48 hours. In case of foreclosure or multiple offers, the process can get extended.
Besides settling on the house price, you and the seller are required to discuss fees like earnest money, contingencies, and closing date until you come to an agreement with the seller.
Apply for Mortgage (1-2 months)
Even if you have got pre-approval for a mortgage loan, you still need to make a formal request to get a mortgage. You need to required papers for applying for the home loan to get your loan approved.
You also need your seller to complete the underwriting process for home loan approval. On average, this process is completed in 2 months. The mortgage lender can give you a quick idea of how much time it will take to complete the delivery.
Wait for Appraisal and Home Inspection (3 to 4 weeks before closing)
Before you actually purchase the house, you need to hire a home inspector to make sure that no unpleasant surprises are hidden for you in the new home. The inspector will check structural, environmental, and electrical issues.
While the professionals are working, there is not much for you to do. So, you can wait for them to complete the work and hope that everything comes clean.
If the inspector discovers anything that needs to be repaired, you can confidently negotiate on the price. Once the home inspection is done, your mortgage lender will do a quick appraisal to confirm the actual value of the home you want to purchase. After appraisal and inspection are done, you will be “cleared to close.”
Complete the Title Review (about a week before closing)
As you move towards the closing process, you need to rest assured that everything is going fine. For this, you should complete the title search and review. During this process, the title company goes through all the legal paperwork.
The company will then complete the title before your closing date. However, if there is an issue with the title, the closing date can get delayed.
Get Cleared to Close
After applying for the mortgage, there will be a pile of paperwork. You must send it to an underwriter, who will check all the information thoroughly. Also, you should do a final walkthrough to see whether or not the seller has done what they have promised.
Hand Over Down Payment and Closing Costs (1 day)
At last, you can close on your new home, which is done in a day. You need to hand over the down payment and closing costs for this. Also, you are required to sign several papers as you are officially going to become a homeowner.
Remember that the sooner you complete the pre-closing, the more likely the seller will move out of the property. With this, you will complete the closing process.
In an era where we have become used to one-click, quick delivery, six months might feel like an eternity. But this time is required so that you can officially become a homeowner without any complications.
If you try to rush the process to get the property ownership quickly, you might miss something important. And if this happens, you should be ready to face issues sooner.
Thus, carefully plan the dream home buying process timeline, get a pre-approval mortgage, find a real estate agent, apply for a loan, pay the closing costs, and complete the down payment.