How long does it take to buy a house
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There is a lot of teamwork involved in buying a home, from the real estate agent to your loan officer, home inspector, legal counsel and the rest of the crew. While working together will guarantee you a good buy, it is also a complex and time-consuming process.
“Most of the ‘slow’ parts of the home buying process are the human parts,” says Nobu Hata, CEO of the Denver Metro Association of Realtors. This is why “good communication is essential here”.
Stay in touch with your real estate agent and mortgage lender throughout the home buying process. Respond quickly to any questions they have or requests they make.
The home buying schedule can span three months or more. But knowing what to expect and communicating every step of the way can speed up the process. Here’s how to get into your new home as quickly as possible.
What are the steps to buying a house?
When to buy a house, think of the timeline as two main segments: finding the home and closing the loan. The steps leading up to applying for a mortgage can take up to two months. Once you are there, it may take 30 days or more to close. In January 2021, the closing process took an average of 58 days, according to a report from ICE Mortgage Technology, an origination platform provider.
Prepare by understanding the steps involved and the time you can expect to spend on each:
1. Get pre-approved
Average duration: 1 week
Budgeting is the first step in the home buying process. To help you do this, consult a mortgage lender and apply for a pre-approval letter. They will withdraw your credit and ask questions about your income, debts and assets.
This puts you on the right track because “you might think you can afford X, but the reality is you can probably only afford Y,” says Ron Haynie, senior vice president of mortgage finance policy for the Independent Community Bankers of America. The pre-approval letter presents your true financial picture.
From there, you can look at the homes in your price range and show sellers that you are serious about your offer because you already have a lender on board.
To speed things up, gather all of your documents before contacting the lender. These typically include:
- Two years of W-2 forms
- The most recent pay stubs
- Two years of federal income tax returns
- Two months of bank statements
- Identification such as a driver’s license
You don’t want the paperwork to be an inconvenience preventing you from locking down your future home.
2. Hire an agent and find a house
Average duration: 4 weeks
The next step is to hire a real estate agent to help you find a home. They will set you up with several Updates to the Ad Service (MLS) so you know what’s on sale in your area.
“Your real estate agent is a guide,” says Nicole Rueth, production branch manager with the Rueth team at Fairway Independent Mortgage Corporation in Colorado. Your agent will help you make decisions and should be a “lawyer,” Rueth says. “They should be the person who looks like your mother or your therapist and your teacher.”
Realtors can help you save time by showing you homes that are on your budget and in neighborhoods that suit your needs. Every time you take an important step, your real estate agent is already preparing you for the next step.
3. Make an offer and negotiate
Average duration: 1 week
Once you’ve found the perfect home, your agent will submit a letter of offer to the seller. They will help you set an offer price and a deadline, but you need to know in advance how much you’re willing to spend.
“The ‘right number’ to assert on the contract is both an art and a moving target in a competitive market,” says Hata. If you want space to negotiate, make the initial offer lower than the maximum you can afford. (Your pre-approval letter can help guide this amount.) You can also negotiate the closing date, request seller credits, and include contingencies in the offer.
This part of the schedule is flexible and can take several days as the seller can either accept your offer or negotiate until you both settle the price and terms. Once this is final, both parties will sign a purchase contract.
4. Schedule a home inspection
Average duration: 1 week
An inspection is the real estate equivalent of a doctor’s physical examination, says Hata. It is an essential part of the home buying process because it can reveal flaws that only a professional can uncover.
While the home inspection itself only takes a few hours, you will need to schedule an appointment that works for you, the inspector and the seller. During this process, the inspector walks through the house and assesses major systems, outlets, appliances, walls, ceilings and floors. You will receive a report listing all the issues.
“Any house that has lived in before will have bumps and bruises,” says Rueth. “The question is: does this house have any broken bones?”
If so, you will need to determine how you want to deal with these issues. This is your chance to negotiate with the seller to resolve any issue. If you can’t come to an agreement, you can always opt out of the purchase if your contract allows.
5. Apply for a mortgage and compare offers
Average duration: 1 week
Once you make an offer on a home, you can officially apply for a mortgage. While you can speed up the process by going to the bank that gave you a pre-approval letter, it’s best to take your time. Gathering mortgage rate quotes several lenders can actually help you save money in the long run.
According to a Freddie Mac Poll, borrowers could save about $ 1,500 over the life of the loan by getting at least two quotes. And if they get five quotes, borrowers could save up to $ 3,000. Once you have several of these quotes in hand, use the best deal to negotiate with other lenders. You can ask them to match (or beat) the interest rate, lower the closing costs or speed up your closing schedule.
6. Communicate during the subscription process
Average duration: 4 to 8 weeks
Once you have chosen a lender, the bank subscriber order an appraisal of the home you are buying and check your financial health.
The underwriter is the “real workaholic” in the mortgage process, says Hata. They guarantee that “the buyer and the house are a good investment for the bank”.
The bank does most of the work during this part of the mortgage schedule. But good communication can help speed up the closing process. If the lender has questions and requests additional documentation, get back to them quickly. The process slows down if you take days to follow up, forget to notify the lender of significant changes (like a job change), or incur new debt, says Rueth.
7. Close on the house
Average duration: 1 day
The closing day is the last step in the process. Before you sign the closing papers, you’ll take a tour of the property “to make sure all those ‘broken bones’ in the house have been fixed,” says Rueth.
If all goes well, you’ll head to the closing table where you pay your closing costs and sign a stack of documents.
“A lot of these documents are actually obtained before the shutdown,” says Haynie. Read the Closing Disclosure before closing day so you don’t try to decipher everything on the spot. “The Closing Officer, however, should walk you through each document and explain to you what it all means.”
Remember to bring whatever your lender asks for, like an ID card and cashier’s check for closing costs. After signing the documents, you will receive the keys to your new home.
What you can do to speed up the home buying process
The mortgage industry has seen it all when it comes to buying a home. Here are some of the best tips on how to effectively manage the process:
- Check your credit before applying. Your credit score has a major impact on your mortgage eligibility and the interest rate you get. Before applying for a mortgage, pull your credit to see where you stand. Credit score requirements vary depending on each lender and mortgage program. But if your score is low, take action to improve your credit before approaching a lender.
- Make a list of what you want. Specify what type of home you want, where you want to buy, what tradeoffs you’re willing to make, and how much you’re willing to spend. This will help you “pull the trigger” when you need to make quick decisions, says Hata.
- Respond to requests quickly. When your mortgage lender needs more documents or has questions, follow up as soon as possible. “Responsiveness is one of the main indicators of success,” says Rueth.
- Secure your team in advance. You can research real estate agents, home inspectors, home insurance companies, and other ancillary service providers before you need them, Hata says. When you’re ready to take any of the home buying steps, you’ll know who to call.
- Don’t delay applying for new credit. When buying a home, it’s wise not to “ask for or move money until you’ve signed on the dotted line at the close,” Hata says. Buying a new car, building up a credit card balance, or financing new furniture could cause your debt-to-income ratio to go haywire and slow down the closing process.
“There are so many pieces to the home buying process, and no one entity controls all the pieces of the puzzle,” says Haynie. “That’s why you need to stay actively engaged and help manage the process as much as you can.”
Remember that a little preparation and patience for a few months can translate into many happy years, if not decades, in your dream home.