There were over 6 million homes sold in the U.S. in 2018, according to recent statistics. That means that at least 6 million individuals went through the process of buying a new home. But if you are a first-time home buyer, there are two questions you want answered before you begin your home-buying journey: What are the steps involved in purchasing a home, and how long does it take to buy a house?
It can take as little as 30 days and as long as six months to buy a home. Factors that influence the time frame are things such as your financial situation, the housing market, and how much time you have to dedicate to the search.
While you might not be able to start your search with a definite end date, there are seven steps that you have to take before you unlock the door to your new home for the first time. The length of each step is unique for everyone, but here is a ballpark estimate of how long your home buying journey will take.
1. Determine How Much House You Can Afford
The first step in any home search — and perhaps the most crucial — is to determine how big of a house you can comfortably afford. There are a variety of online calculators to help you figure this out. Aim to spend less than 30 percent of your monthly gross income on housing costs. This includes what you expect to pay on your mortgage payment, as well as things like property taxes and maintenance.
You’ll also want to determine your likely down payment and closing costs so you can make sure you have that on hand when the time comes.
It might also be worth really evaluating if buying is the right decision. You can do this by looking at the cost of renting vs. buying over time.
Time Frame: Varies
2. Compare Lenders and Get Pre-Approved
Once you’ve figured out how much house you can afford, you’ll need to understand the process of getting a mortgage and start comparing mortgage lenders. Before you get started, you’ll need to have a few things ready. Run a credit report to get your credit score — the higher your score is, the better chances you have of receiving a home loan with favorable mortgage rates — and come up with a planned down payment amount.
Happily for consumers, the lending market has changed over the past decade since the Great Recession. While in 2011 more than half of all mortgages were loaned by the three biggest banks in the United States, by 2016 that number had dropped to just 21 percent.
There are now a variety of lending options available from traditional brick and mortar banks, as well as online banks and lenders. There are pros and cons to each, but online banks can often save you up to 60 basis points (0.6% APR) on a loan. That might not sound like much, but if you take out a $200K loan, that extra 60 basis points can cost you up to $25K over the term of a 30-year loan.
Once you’ve found two to three lenders you trust, it’s a good idea to get pre-approved through them to be able to compare offers. This is often the best way to get accurate pricing, as they’ll each do a thorough review of your credit and finances.
The process of getting pre-approved usually takes anywhere from one to three days, but may take longer depending on your credit score. In any case, comparing mortgage lenders is not only a good idea to find the best deal for you — it also helps speed up the rest of the home-buying process, as some sellers and even realtors won’t consider an offer from you without a preapproval.
Time Frame: 1 to 3 days
3. Prepare Yourself for the Search
So you’ve determined how much house you can afford and are armed with a pre-approved mortgage. Now, you need to determine what you absolutely must have in a home — things like the location, size, and amenities — and what would be nice to have. This will help narrow down the list of homes to view, and ultimately save you time while you’re house hunting.
Another time-saving option is to find a realtor to help you in your house search. They typically know the community and area well, and can help better evaluate factors that are of critical importance to you such as school systems and neighborhoods. They may also have access to homes before they come on market — increasing the likelihood you’ll find the best home for you before someone else snatches it up. And finally, realtors can help in the negotiating and closing processes, which are often overwhelming for new home buyers.
Time Frame: Varies
4. Begin Viewing Homes
This is the part of the home-buying process that is highly variable, as it will depend on the inventory in your target market and your specific needs and wants. By being proactive and looking at homes online using aggregators like Zillow, Trulia, and Realtor.com, you can stay on top of what’s available on the housing market at any given time. Your realtor can also be helpful at this stage, staying on top of new listings and scheduling open houses for you.
Make sure you make time to view homes in person. If your schedule and responsibilities prevent you from visiting homes and attending open houses, some listings may slip through your grasp — adding extra days, weeks, or months to your home search.
Time Frame: Varies
5. Find One You Like and Make an Offer
This is where having a pre-approved mortgage and a real estate agent can really save you some time. Your realtor should be familiar with the real estate market in your area, and can help you come up with a reasonable offer that is fair to both you and the seller.
Once you make an offer, be prepared to wait one to three days for an answer.
If your first offer is rejected, don’t be discouraged. About half of all first offers aren’t accepted, and you may have to negotiate a bit more with the seller. The realtor you so wisely hired will be there to help you through. And although a rejected offer might add some extra time, just think — maybe in those extra few days the home of your dreams came on the market. Your patience will pay off.
Time Frame: 1 day to a few weeks
6. Do Your Due Diligence
After you’ve made your offer and it has been it accepted by the seller, allow for seven to 10 days to inspect the property, and then renegotiate any major items that may surface during the inspection.
You’ll also need to have the home appraised to determine its market value. This is for your chosen mortgage lender to ensure they’re not extending a loan that is worth more than the home’s purchase price. The appraisal process can take up to a few weeks.
This is all part of the closing process, and is in your best interest, as well as your mortgage lender’s. While these two steps add time to your home-buying journey, they’re well worth the extra few days to make sure you don’t get hit by costly surprises down the road, like a cracked foundation. You’ll rest assured that the home you’re purchasing is worth the time and money you’ll invest in it going forward.
Time Frame: 7 days to a few weeks
7. Close on Your New Home and Move In
You’ve completed your home inspection to your satisfaction, landed on a final price with the seller, ensured the home appraisal value was in line with your purchase price, and finalized your mortgage. Woohoo! You’re in the home stretch (pun intended), but there are still a few more steps before you can kick your feet up in your brand new home.
You still need to sign and close. In some states, signing and closing happen at the same time (i.e. you sign and you or your bank wires the money to the seller on the same day). In other states, signing may happen a few days before closing to ensure that the bank has the ability to do a final underwrite.
Regardless, there are a few things you should do to prepare for this final hurdle. First, ensure you have homeowner’s insurance and do one final walkthrough of the home to confirm nothing has changed.
Next, gather the items you need for your signing meeting. Here’s what you’ll need:
- An official ID
- Mortgage agreement (you’ll get this from your bank or lender at closing)
- Home inspection reports
- Down payment as a cashier’s check or a wire transfer
Also, you should be prepared to pay closing costs and other fees, which can amount to 2 to 5 percent of the home’s purchase price.
Once you have everything in order, it’s time to schedule your meeting. You should allot at least a half day for this meeting to give yourself plenty of time to read over each and every document. This is a momentous purchase, and you should make sure you feel comfortable with the final contract.
Finally, it’s time to close. The home is yours!
Time Frame: A few days to a few weeks
The Time Frame May Vary, But It’s Worth Every Second
The time it takes to buy a house varies. While the exact weeks, days, and hours will be unique to your experience, you should expect to move in to your new home anywhere between one and six months from the beginning of your search.
There are things you can do to speed up the process if you’re in a hurry. Ensure your credit score is as good as possible before applying for a mortgage loan, then get pre-approved. Hire a real estate agent to help in the house hunt, as well as when making an offer.
But some factors are simply out of your control, and that’s okay. Finding the perfect home isn’t a race, and taking your time isn’t a bad idea. Buying a home is probably the largest purchase you’ll ever make, and you want to make sure it’s the right one for you. By educating yourself about the process, you can make sure it goes as smoothly as possible, and that the house you end up buying is one you’ll love for years to come.