For most of us, buying a house is the largest purchase we’ll ever make. It can also be one of the most time-consuming because it involves so many moving parts. Depending on your goals, finances and housing market, the process can take weeks, months or even years. Every situation is unique, but that doesn’t mean you can’t estimate the time it will take you based on your circumstances and what most buyers experience. Read on to see how long the three main stages of the home buying process typically takes, then create your own personal home buying process timeline to plan ahead.
Getting a Mortgage Preapproval
Unless you have enough cash to buy a home outright, one of the first steps to buying a house is getting a preapproval letter from a mortgage lender. This signals that a lender has reviewed your finances and approved a loan amount you’re entitled to receive. It’s important to get preapproved early on because many sellers only consider offers that include a preapproval letter. Without one, there are no guarantees that a buyer can follow through on an offer.
Depending on your circumstances, getting a preapproval letter can take minutes or – if you need to improve your financial situation – months. The X-factors are how long it takes a lender to verify your information and whether you need more time to bulk up your savings and qualify for a loan you’re happy with.
What you need to do to get preapproved:
- Check your credit score. Everyone is entitled to a free credit report from the major credit bureaus – Equifax, Experian and TransUnion – once per year. You’ll get your report immediately if you access it online. It takes a score of at least 580 to qualify for a loan, but you can unlock more home buying options and a better interest rate if you’re above 620.
- Shop for the right mortgage lender. You’ll most likely be making mortgage payments to a lender for years, or even decades. Make sure you choose a company that’s easy to work with. It’s wise to spend at least a week or two reading up on reviews, rates, awards and services of various lenders so can you make the right choice for the long haul.
- Submit the necessary documents. You’ll need to provide your lender with copies of the following forms:
- W-2 statements from the past two years
- Bank statements to show how much money you have saved
- Pay stubs as proof of employment and income
- Tax returns from the last few years
- Your driver’s license and possibly your social security card
Once you supply the documents, it can take minutes or several days for a lender to review your information and provide a preapproval letter.
What might cause delays:
The need for a higher credit score. If you need to boost your credit to qualify for a loan, you might need to spend a few months making timely payments on your bills. Another option is to shift debt around so that you’re spending below 30 percent of each card’s limit. For more on what you can do to raise your credit score, check out our blog, 5 Tips to Get Your Credit Mortgage-Ready.
Ballpark Timeframe to Get Preapproved – One to two weeks
Searching for a Home
After you get a preapproval, the next step is finding your new home. Getting a real estate agent should speed up the process, because your agent will help you learn about all your home buying options and schedule home tours quickly. An agent will also help answer your questions and negotiate the terms of a purchase agreement with a home seller.
House hunting is the most unpredictable stage of the home buying process, and can take weeks, months or even more than a year. Most preapproval letters are only valid for 60 to 90 days, so if your search stretches beyond two months you may need to circle back with your lender and go through the preapproval process again.
What you need to do to find the right home:
- Hire a real estate agent. Decide on your must-haves in terms of square feet, location, rooms and features. This will help you find an agent who specializes in buying the type of home you want. It will also help you narrow down your online search so you don’t waste time sorting through duds. Your search for an agent can take a day or month, depending on your approach. Learn more about finding the right agent for you in our blog, What You Need to Know about Working with a Real Estate Agent.
- Tour homes. Most sellers will only grant access to their homes if you have a real estate agent. If you don’t, you could be stuck waiting around for open houses and lose days or weeks in the process. Try to coordinate your schedule with your agent so that you can view multiple houses in one outing and maximize your time. However, experts recommend viewing no more than six or seven houses in a day. Any more than that can cause brain overload.
- Get an offer accepted. This involves sitting down with your real estate agent to decide on an offer amount and any contingencies your offer is based upon, like getting a home inspection. Sellers typically have 24-48 hours to respond. In most cases, a seller will make a counteroffer to kick off negotiations. This stage of the home buying process usually lasts a few days but can go longer than a week if there’s a lot of haggling.
What might cause delays:
Low home inventory. If you’re in a hot seller’s market, you may not have many options that fit your wish list for a new home. In addition, there might be multiple offers on most of the homes you’re interested in, making it tough to get an offer accepted. Your housing market will often affect how long it takes to buy a home, and you may need to broaden your search criteria to find a winner in a reasonable time period.
Ballpark Timeframe to Find a Home - Six to ten weeks
Closing on Your Home Purchase
Many of us think of the home buying process as touring homes, making offers and reaching an agreement with a home seller. But the most time-consuming part of the process often comes after an offer is accepted – during the closing.
Even if a lender verified your employment, bank accounts and credit to provide a preapproval, there’s more work needed to seal the deal. Underwriters must process the paperwork, review an appraisal of the home and officially close the loan. You’ll also have your own list of tasks to complete before you get the keys to your new home.
Most home loans can close within 30 days, but special first-time home buyer programs can take longer. Missing documents or miscommunication can also cause delays. On average, most loans close within 40-50 days.
What you need to do during the closing:
- Get a home inspection. If you include an inspection contingency in your purchase agreement, you can have the home professionally inspected and request repairs if any serious issues are discovered. Just as you would when choosing a lender, spend a few days shopping around for a credible inspector familiar with the type of home you’re purchasing. After an inspection is completed, you should receive a report of their findings within 48 hours. Learn more about the process in our blog, 5 Ins and Outs of a House Inspection.
- Have the home appraised. A home appraisal is an unbiased estimate of the fair market value of a home. This is typically ordered by a lender to make sure the home value and sale price are in the same ballpark. All you need to do is contact the lender after your offer is accepted to get the ball rolling. The appraisal itself doesn’t take long – usually an hour or two, depending on the size of the home. From there, it takes about three days for the lender to receive the report.
- Clear the title and get title insurance. One of your most important to-dos during the home buying process is purchasing a title insurance policy. This will protect you against any ownership issues with the home you’re buying, like liens or levies against previous owners. Typically, your escrow agent or real estate agent will order the policy after your purchase agreement is signed. It usually takes about two weeks for the policy to come through, barring any road bumps.
What you might cause delays:
Repairs after the inspection. After an inspector reports on a home’s issues (and there are always at least a few – no home is perfect), you can negotiate repair work if you included an inspection contingency in your purchase agreement. There are no hard and fast rules about which issues should be fixed and who covers the cost. As a general rule, you should expect the seller to address major problems like a faulty roof or mold – not a cracked tile or leaky faucet. If a home does need major repairs, a closing can be delayed for days, weeks or months.
Ballpark Timeframe to Close – Four to eight weeks
Give Yourself Enough Time to Buy the Right Home
Deciding to buy a home is a big deal. Your decision will typically affect your lifestyle, finances and well-being for years or even decades. That’s why the process shouldn’t be rushed. You may want to time your move to coincide with the new school year, getting a new job or any number of major life events.
Just be sure to take a “hope for the best, plan for the worst” approach, and if you can, give yourself at least four months to make the right move.
When you’re ready to get started, we’re ready to help. Find everything you need to get approved for a mortgage, search for homes and connect with the right real estate agent at RocketHomes.com.