In this article:
- Before You Start Searching for a House
- 1. Find an Agent: Up to Two Weeks
- 2. Get Preapproved: One to Two Weeks
- 3. Go House Hunting: A Few Days to Several Months
- 4. Make an Offer and Negotiate: One to Seven Days
- 5. Loan Approval and Due Diligence: 15 Days to Two Months
- 6. Close on the Loan: One Day
- How to Avoid Delays When You Buy a House
The amount of time you'll spend finding and buying your dream home depends on a number of factors, including market conditions and personal factors.
The mortgage process alone takes an average of 45 to 60 days, according to The Mortgage Reports, but you'll also need to take the time to find an agent, house hunt and possibly even sell your existing home. As you begin the homebuying process, here's what to expect.
Before You Start Searching for a House
The homebuying process can be all-consuming for some prospective buyers, so it's important to establish a few things before you make the commitment. Keep in mind that your experience will be much easier and quicker if you're a cash buyer who can skip over the mortgage approval process. For most people, that's not an option.
Check Your Credit
You generally need a credit score of 620 or higher to get approved for a mortgage, though some government-backed loans allow credit scores as low as 500. If you want a lower interest rate, though, you'll likely want a score in the upper 700s.
Check your credit score to get an idea of what to expect in terms of approval odds and loan terms. If your score is lower than you'd like, take some time to improve your credit before beginning the process.
Get Your Finances in Order
Lenders typically require a down payment of as little as 3%, though some loan programs don't require one at all. Additionally, you may need to show additional cash reserves on top of your down payment.
Take a look at your savings balance and determine whether you have enough to buy the type of home you want. Also, look for opportunities to pay down credit cards and small loan balances to help reduce your debt-to-income ratio (DTI). Your DTI is a crucial factor mortgage lenders consider when calculating how much a homebuyer can afford to borrow.
Determine the Monthly Payment You Can Afford
Once you know how much you can afford to put down on a home, take a look at your budget to gauge how much you can afford to spend on a monthly mortgage payment. Then, take a look at average mortgage rates and use a mortgage calculator to estimate the affordability of different loan amounts to zero in on your budget.
1. Find an Agent: Up to Two Weeks
A real estate agent isn't required to buy a house, but working with a professional who knows the local market and has experience negotiating with sellers can make the process a lot easier. What's more, sellers typically pay buyer's agent commissions, so it won't affect your finances.
To find a good agent, start by asking friends and family members for recommendations. Then, interview each agent to get an idea of their personality, experience, knowledge and approach to helping you buy a home. You want this person to be a trusted advisor, so take your time to find the right fit for you.
2. Get Preapproved: One to Two Weeks
The preapproval process itself may only take a few days, but you'll want to shop around and compare several lenders and loan programs to determine the best fit for you. You can submit separate applications to individual lenders or work with a mortgage broker who will take a single application and shop it around.
Because mortgage preapproval is the closest thing to getting approved, you'll need to provide information about yourself, as well as certain documents like pay stubs, bank statements, tax returns and more. If you don't already have these documents handy, set aside time to gather them.
3. Go House Hunting: A Few Days to Several Months
Once you have a preapproval letter in hand, you'll typically have between 30 and 90 days to find a home before you need to go through the preapproval process again. Talk to your agent about what you're looking for in a house, and they'll set up viewing appointments for homes you're interested in. To speed up the process, you can also search listings on your own and send them to your agent.
Depending on your preferences and the state of the local housing market, you may be able to find the home of your dreams quickly, or it may take several weeks or even months to find a suitable property.
Even if you do find one you love, you may end up back at square one if you get outbid by another buyer or a contract falls through.
4. Make an Offer and Negotiate: One to Seven Days
If you find a suitable home, your real estate agent can help you put together an offer to send to the seller. Depending on the terms of your offer—and potential offers from other prospective buyers—the seller may accept it, reject it or make a counteroffer.
If your offer doesn't get accepted right away, your agent will help you negotiate until both parties are satisfied or either you or the seller walks away. If you're in a seller's market with a lot of competing buyers, negotiations can get drawn out longer or the seller may be quicker to walk away for a more competitive offer.
If both parties agree on terms, sign a contract.
5. Loan Approval and Due Diligence: 15 Days to Two Months
Once you're under contract, some lenders offer to close on your mortgage loan in as little as 15 days. But in most cases, you can expect the process to take one to two months. During this time, your loan officer or broker will ask for additional documentation to get a full picture of your financial situation.
The lender will also typically require an appraisal and inspection of the new property, among other things, which can be completed while they're finalizing your loan approval. This due diligence period allows you to legally back out of the contract without penalty if something is amiss, and you'll typically have between one and two weeks to complete everything.
During this time, you'll also want to do at least one or two more walkthroughs of the home and research the surrounding area to make sure it's the right fit. Additionally, shop around and compare homeowners insurance policies, so you can have one in place in time for closing.
6. Close on the Loan: One Day
Once you've completed your due diligence and received final approval for your mortgage loan, you'll meet with your agent and a title company representative or real estate attorney to complete the transaction.
You'll typically need to bring proof of identity, proof of insurance coverage and the funds required to close—usually a wire transfer or cashier's check. If there aren't any hiccups with the property title or anything else, you can generally complete the signing process in one or two hours.
How to Avoid Delays When You Buy a House
The homebuying process can be lengthy, and with so many moving parts, delays are common. While there are some issues you can't do much to prevent—for instance, you don't have control over a low appraisal or a problem with the title—here are some steps you can take to get through it as quickly and smoothly as possible:
- Get preapproved before house-hunting. You'll want to complete the preapproval process before you start looking at houses because it tells sellers that a deal is more likely to go through. It'll also give you a more accurate idea of how much house you can afford. If you wait, you may have a harder time finding a seller willing to work with you.
- Don't apply for new credit after the preapproval. Before finalizing your loan approval, the lender will run another credit check before closing. If you've applied for credit in the meantime, it could affect your eligibility or loan terms. As a result, it's crucial to avoid applying for credit during the mortgage process.
- Avoid large purchases. Large purchases can impact your down payment and cash reserves, so it's important to avoid them until after you close on the house. Additionally, racking up credit card debt could increase your debt-to-income ratio and impact your eligibility.
- Provide documentation promptly. Lenders may ask you to provide documentation or sign disclosures several times during the loan approval process. Check your email multiple times a day and answer phone calls from your agent and loan officer to stay on top of requests and complete them as quickly as possible.
- Complete due diligence on time. Talk to your agent about setting up appointments with an appraiser and inspector, and follow up to ensure everything is done on time.
- Stay on top of repairs. After the inspection, you may ask the seller to complete certain repairs before closing on the home. If they're not completed in time, it could push back closing, so ask your agent to communicate regularly with the seller about the status of your requests.
If you're also planning to sell your existing home, you'll want to get that process started before you start looking for a new home so you're less likely to end up with two mortgage payments. An experienced agent can help you with both transactions, making the process more convenient. But in some cases, it can make sense to work with different agents, especially if you're moving out of state.
The Bottom Line
Buying a house can be a time-consuming process, and depending on your personal situation and the local real estate market, it can also be a frustrating one. To make the process go more smoothly and minimize delays, get your credit and financial situation ready and be diligent as you work with your agent and loan officer or broker.
In addition to checking your credit before you start, monitor your credit throughout the homebuying process to stay on top of new developments and understand how your actions impact your creditworthiness.