Buying a house is no simple matter. There are multiple steps, each of which can take days or even weeks to complete. The process may feel daunting, but there’s light at the end of the tunnel.
If you know what to expect during the homebuying process, you can do the prep work needed to keep it humming along. To learn more, read on for a step-by-step guide to buying a house and how long you can expect it to take.
- On average, it takes 52 days to close on a mortgage. The overall homebuying process often can take even longer.
- Preparing your credit, finances, and paperwork ahead of time can help you get approved for a mortgage faster.
- Consider hiring a real estate agent, who can help you find the right property and craft an effective offer.
- Getting preapproved for a mortgage can also help accelerate the process and show sellers you’re serious.
Getting Ready To Buy a Home
You may be excited to put in an offer on your dream home. However, before you get too far along in the homebuying process, it’s important to take a few preliminary steps. This will ensure you get approved for the financing you need, at an affordable rate.
Check Your Credit
First, check your credit reports and scores. Many lenders require a credit score of at least 740 to get a mortgage. So make sure there aren’t any errors or negative items that can drag your score down.
You can get a free copy of your credit reports from all three credit bureaus at annualcreditreport.com.
This can take a matter of minutes, or much longer, Tony Mariotti, a Realtor and CEO of RubyHome, told The Balance by email. The timing depends on whether your credit is in good shape. If you need to dispute an error or spend some time paying down debt to improve your score, you may need a month or longer.
Gather Your Documents
Financing a home requires quite a bit of documentation. Lenders want to see that you have the income to support a mortgage payment, and the savings to fall back on if you experience financial trouble. You’ll need pay stubs and tax returns going back at least two years, as well as bank and investment account statements, lists of outstanding debts, divorce decree (if applicable), and more. Spending a day or two to gather these items ahead of time will make the application process go much smoother.
Get Mortgage Quotes
It’s crucial to shop around for the best mortgage rates and terms to be sure you’re getting a good deal. This means getting quotes from several lenders. Typically, this can be done in an hour or two; most lenders allow you to submit some basic information online to receive quotes instantly.
Once you find a few potential options, it’s a good idea to speak with a loan officer about your situation and to negotiate the terms of the offer, Mariotti said. “I would [spend] a week or two, depending on how much time you have to shop around.”
Apply for Preapproval
Another way to speed up the process is to get preapproved for a mortgage. This lets you know exactly how much you can spend on a home, and it lets sellers see that you have the money to make good on your offer. Mariotti said it should take about a week between sending in your documentation and receiving a preapproval letter.
Getting preapproved doesn’t mean you actually have a mortgage in place. You’ll still need to complete the application process and sign a contract once you’re ready to buy.
Buying a House
Once you have your buyer’s housekeeping out of the way, it’s time to begin your house hunt. “Now that you know your budget, you can do some preliminary research online to find the areas with properties that meet your requirements,” Bill Samuel, a licensed real estate broker and residential real estate developer, told The Balance by email. Once you get a general idea of what’s available, you can start narrowing your search.
Hire a Real Estate Agent
Although you aren’t required to hire a professional buyers’ agent, it can definitely help make the process much less stressful and time-consuming. A good real estate agent or Realtor knows the local market and can help you find exactly what you’re looking for. Plus, they can walk you through all the paperwork and when it’s time to make an offer, can help you choose the right figure.
“Meet with a few different Realtors to figure out who you vibe well with,” Mariotti said. “This shouldn't take too long—a week should suffice.”
Shop for a Home
“Hone in on your needs and wants before beginning your search,” Mariotti recommended. As you tour homes, keep a short list of the ones you like the most. “Develop a ranking system or grading system to help keep track of your top favorites,” he added. This will help you keep track of what you liked or didn't like about each property, and narrow down your list more easily.
The amount of time you spend on this step is up to you. It’s important to take your time and find the right property, but you don’t want to move so slowly that you miss out on a popular listing. Mariotti said a reasonable length of time to spend is around three months, although it could go faster if the market is particularly competitive.
Putting in an Offer
“If you decide that you are interested in a property…you will sit down with your Realtor to write up and submit a formal offer,” Samuel said. It’s important to submit an offer that you can afford, but one that is also attractive to the seller and likely to be accepted.
The seller will consider your offer and may make a counteroffer. In fact, you may bounce numbers back and forth a few times before settling on a deal. This process can take up to six to nine weeks, Mariotti said.
Closing on a Home
“Once both parties are in agreement on the details of the offer—which may include an earnest money deposit amount, timelines for contingencies, closing dates, and any additional details—a contract is formed, locking in both parties,” Mariotti said.
Now it’s time to get down to business and work toward closing on the house.
Get Your Future Home Inspected
Within five days of signing the contract, Samuel said, you should schedule a home inspection. There may be more than one required, such as a general and a pest inspection.
“During the inspection, you will go through every corner of the house to discover any defects (which often takes about two to three hours) and then receive a formal report of the findings a day or two later,” he said. At this point, you’ll need to decide what repairs (if any) you will require the seller make before moving forward with the purchase of the property. “There are typically a few days of back and forth until an agreement on the required repairs is made,” Samuel added.
Get the Home Appraised
Next, the lender will order an appraisal, and the report from that should be delivered to you no later than three days before closing. This step involves an appraiser visiting the property to determine the fair market value. The lender wants to verify that the home’s value matches the amount you’re attempting to finance. If the property is appraised for less than you’re borrowing, the loan may be denied.
Get Homeowners Insurance
Usually, you secure a homeowners insurance policy before closing on a home. This ensures that your investment is protected from the beginning. In fact, most lenders won’t fund a mortgage until there’s a policy in place. Once you’ve chosen an insurer, it usually takes one to three days to process.
Get Title Insurance
Once your purchase agreement is signed, your closing or escrow agent will begin the process of securing title insurance, which takes about two weeks. Generally, the buyer pays for the lender’s title policy, which protects the lender until the mortgage is repaid. A homebuyer’s title insurance policy protects the actual owner for as long as they own the property; the seller usually pays for this. Title insurance policies cost around $1,000, though you could pay less if you shop around.
Getting title insurance is crucial. It protects you financially if there’s an unknown lien or judgment against the property.
Final Mortgage Approval
Once all the above steps are completed, underwriters will double-check your documents, credit information, and financial situation to make sure nothing has changed. “After completion of a successful appraisal and full review by the underwriter, the loan will be issued ‘clear to close,’ ” Samuel said. This often happens right away. “At this point, you will schedule a specific closing date and time to complete the final paperwork.”
On the other hand, if you’re required to provide additional information or clear up any discrepancies in your paperwork, the closing process can be delayed for as long as it takes you to resolve the issue.
Prepare Your Closing Funds
Before you head to the final meeting, you’ll need to get your “cash to close” ready. These are any fees you owe to close on the home, minus your earnest money deposit. Find out from your lender exactly how much you need to bring. If you’re wiring money from another account, this could take one or two business days. Initiate the transfer in advance so you have the cash on closing day.
Do a Final Walk-Through
Finally, Samuel said, you will schedule a final walk-through of the home before the scheduled closing. If there are any last-minute problems, the seller has some time to make the fix before closing and you can avoid a delay. “Be sure to verify any repairs the seller promised to make,” Samuel said.
Following the contract period, and assuming all is moving forward without issues, the buyer will receive a Closing Disclosure from the lender. “After a minimum of three days for the buyer to review the details, a closing meeting is scheduled, at which the title documents are signed, all outstanding closing costs are paid, and the seller walks away with their proceeds,” Mariotti said.
If you’ve reached this point, congratulations: You’re now a homeowner.
Frequently Asked Questions (FAQs)
How long does it take to buy a house with cash?
If you happen to have a large amount of cash available to purchase a property, you can accelerate the buying process quite a bit. Because you don’t have to go through the mortgage application and underwriting steps, you can complete the purchase in about a week, assuming your offer was accepted.
How long does it take to buy a house with an FHA loan?
Federal Housing Administration (FHA) loans are a great option for first-time homebuyers because they offer more-relaxed requirements for credit score and down payment. The other benefit is that they can be underwritten by a variety of lenders. However, the process from application to closing can take almost two months. In March 2021, the average time to close an FHA loan was 55 days.
How long does it take to buy a house with a VA loan?
Veterans Administration (VA) loans are another type of government-backed mortgage program that helps borrowers with lower credit scores and more-limited down payments afford homes. These loans are specifically designed for service members, veterans, and their families. For March, for example, the average time for a VA loan to close was 57 days.