The time has come. You’re done with being a renter, and you want to buy your own home. Maybe it’ll be a condo in the city. Perhaps it’ll be a single-family starter home in the countryside. Or maybe it’ll be a townhouse somewhere in-between.
Whichever it is, you’re probably asking yourself how long this process is going to take from start to finish, because — hey — the sooner you stop flushing rent down the drain, the better.
Well, the answer is, “it depends.” It depends on if this is your first home purchase or whether you’ve gone down this road before and you’re looking for a second — or even third — home. For the purposes of this article, let’s pretend you’re a first-time home buyer and look at how long it typically takes to buy a home. Later in the article, we’ll talk about ways that you can speed up the process.
The 5 steps to buying a house
1: Get pre-approved — a day or two*
Before you even start searching for a home, you really need to know what you can afford. For many, this means determining not just how much you want to borrow but how much a lender is willing to loan you.
It’s best to reach out to a lender to discuss your existing income and outstanding and recurring monthly debt to see where you stand and whether you can get pre-approved for a mortgage loan, and if so, for how much. Remember, there is a distinction between a pre-qualification and a pre-approval. A pre-qualification is a guesstimate on how much you can afford based on what you tell the loan officer. A pre-approval is based on an actual analysis of specific financial disclosures and holds a lot more weight when you’re ready to make an offer on a house. You want pre-approval.
If you have a steady job, proof of good credit and no outlandish debt, the pre-approval process can take anywhere from a few hours to up to a few days, depending on how fast and efficient your lender is.
2: Go house hunting — weeks to months
We feel it’s best to choose a neighborhood first, then look for a home in that neighborhood. The last thing you want is to love the house but hate the location. Make sure you like shopping, dining and recreation options available. Schools, too, if you have kids. And you want to be near enough to a good doctor’s office and a hospital but not so close that ambulance traffic keeps you up at night.
Once you have a neighborhood in mind, start the house hunting, and know that this is when the variables come into play. Do you have a good realtor who is familiar with the area? Have you discussed what exactly you’re looking for so you can weed out the time-wasters? Are you flexible? Is your search in a competitive market, or are you looking in an area where homes don’t come up for sale that often? Are you looking for move-in-ready, or are you handy enough to overlook small imperfections? Have you started looking online before hitting the streets and open houses?
Nothing’s preventing you from searching for homes on your own, but if you’re looking for speed, a great real estate agent can make the house-hunting process a whole lot smoother. How long this will take is really up to your own personal circumstances. You may find the perfect house on your first day, but don’t be surprised if it takes weeks or even months to find a home that speaks to you.
3: Make an offer & hear back — 24 to 48 hours*
Once you’ve stumbled onto your dream home, have your real estate agent make a formal offer immediately. Drafting an offer can take as little as an hour to a full day if you specify contingencies or make significant changes to a standard purchase agreement.
After receiving the offer, the seller needs some time to evaluate it, after which they will decide to accept it or not. If they accept, you may need to make a goodwill deposit — also called earnest money — to indicate your intention to confirm the contract. It’s sort of like insurance for the seller so they can feel good about taking the property off the market.
In some instances, you may have a grace period of a few days to change your mind. Or, if the seller submits a counteroffer to your offer, you’re free to negotiate further or walk away. The seller may respond to your offer immediately, but typically it may take between 24-48 hours before you hear something. Some realtors may suggest you put a time limit on your offer as well, so you can walk away and keep shopping if you don’t get a response.
4: Schedule a home inspection — not more than 1 week*
Once your offer is accepted, you’ll want to schedule a home inspection ASAP, preferably within a week. Inspections are essential for two reasons. First, your lender will need a copy of the inspection report to determine the home’s true value. This helps them calculate the LTV, or loan-to-value ratio. Second, you want to purchase a home with no regrets. If the inspection finds a significant flaw that the seller is unwilling to rectify or negotiate, you can walk away.
The most time-consuming part of the inspection is setting it up. Most home inspection companies are booked out several days in advance. So to keep things moving along, make sure you have a qualified inspector lined up as early as possible. Your realtor should have some recommendations of reputable firms he or she has worked with.
You may not know all the questions to ask an inspector, so on the day of the inspection, ask your real estate agent to join you in person. In most cases, you’ll wrap everything up in three to four hours. If it takes longer than that, you may have bigger fish to fry. These things always turn up something, so you shouldn’t delay scheduling your home inspection, especially if repairs are needed before moving on to closing.
5: Contract-to-closing — 30 to 60 days*
Once the seller and you (and your realtor) agree to move forward post-inspection, you still have some time to wait. First, your lender will process your mortgage, organize a home appraisal and probably ask for more documentation. At some point, typically early on, they’ll provide you with a loan estimate: a breakdown of what you can expect to pay out of pocket on closing day.
Additionally, they’ll arrange for a title search to be performed so that on closing day, there are no issues to stop the title and deed to be transferred from the seller to you, the buyer. You’ll also need to arrange for home insurance and provide proof of that to your lender.
There may be a period of back and forth between you and your loan officer, and it may seem like some lenders ask you income and debt-related questions over and over. Don’t lose sight of the prize or get frustrated. And don’t schedule the movers yet: a smooth contract-to-close phase can span from 30–60 days. It’ll take less time if you’re pre-approved for a mortgage rather than pre-qualified, so remember not to skip that first step.
Want to speed up the home buying process?
For a long time, the standard timeframe for the typical mortgage was 30 days minimum. And frequently even more than that. If you’re concerned your home loan process will take an unreasonable time to finalize, you haven’t heard of Movement Mortgage’s unmatched 6-7-1 process.**
- 6 Hours: Our goal for Upfront Underwriting. This results in qualified borrowers receiving a fully underwritten pre-approval.
- 7 Days: Our goal for full processing of the loan.
- 1 Day: Our goal for closing the loan and delivering the keys to your new home.
It’s best to wait to start this process until you’re confident that you have a good credit score, a decent credit history and enough saved up to cover down payment and closing costs. But, if your credit isn’t stellar, or you don’t have a lot reserved for a down payment, don’t fret. Movement Mortgage can guide you to a loan that still may meet your needs. Many federal and regional programs offer first-time buyer programs and grants for a down payment, financing and closing cost assistance.
Contact a Movement Mortgage loan officer in your area to discuss which program might be right for you.
MARCH 17, 2021
*extenuating circumstances may apply
**While it is Movement Mortgage’s goal to provide underwriting results within six hours of receiving an application, process loans in seven days, and close in one day, extenuating circumstances may cause delays outside of this window.