Whether you envision yourself in a single-family house in the suburbs or a condo near a city center, buying the home of your dreams can take time.
“From start to finish, if everything works out according to plan, it can take about three months,” says Lawrence Yun, chief economist at the National Association of Realtors. But he adds that “homebuying is such a major decision. Sometimes it can take years in terms of trying to find that right home.”
From the first credit check to closing, there are many steps in the journey to homeownership. Yun says getting a mortgage preapproval, saving a down payment and researching the neighborhood you want to live in ahead of time can help you avoid unnecessary delays.
Keep reading to learn more about how long each of these steps may take.
» MORE: What is a single-family home?
Preparing for all the costs
If you make a cash offer, buying a home can take as little as two weeks. Buying with cash can be simpler than financing a home purchase because there isn’t a mortgage, which means less paperwork. But an all-cash purchase isn't possible for many.
If, like most people, you plan to buy your home with a mortgage, knowing how much house you can afford is one of the first steps. Affordability depends on your income, debt and funds available for a down payment.
To avoid the extra cost of mortgage insurance, you’ll typically need to put down at least 20%, but it can take home buyers in high-cost areas 35 ½ years to save that much, according to Freddie Mac, a government-sponsored enterprise that buys mortgages from lenders. Some conventional loans allow down payments as low as 3%, but that can still take around five years to save in high-cost areas.
You will also need to set money aside for closing costs, which can be from 2% to 5% of the home’s purchase price.
» MORE: How to save money for a house
A mortgage preapproval is a lender’s estimate of how much money you can borrow based on your income, credit score and debt. A preapproval includes the type of mortgage you’re approved for, the loan amount and other terms.
Though it varies by lender, a mortgage preapproval typically takes several days to complete and may be good for up to 90 days.
Getting preapproved with more than one lender helps you to compare loan offers so you can choose the best interest rate and terms. Preapproval involves a hard inquiry on your credit report, but shopping for rates within a 45-day period can minimize impact to your credit score.
Nerd tip: Before applying for preapproval, check your credit score and credit reports. If improvement is needed, get your credit in shape by making smart money moves like paying bills on time.
Searching for the right house
Armed with a preapproval, you can now begin your home search. Consider enlisting the help of a real estate agent to guide you through the process.
The number of homes for sale and the time of year are among the factors that will affect the length of your housing search. Time spent looking for the right home also varies by buyer, budget and how they choose to search. For instance, buyers who used the internet typically searched for 10 weeks and toured a median of nine homes, according to a 2020 report from the National Association of Realtors.
Making an offer
Once you find the right house, the next step is to make an offer. With help from your real estate agent, you can negotiate specifics with the seller, including the price of the home and closing costs. Negotiations usually last a couple of days, but can take longer if there is a bidding war or a counteroffer.
Going through underwriting
During underwriting, the mortgage lender confirms your loan eligibility by reviewing documentation of your debt-to-income ratio, employment and credit history. Underwriting typically takes over a week to complete, but it can be done in as little as two to three days.
During underwriting, avoid changing jobs or paying bills late, which could put your mortgage application at risk.
Assessing the property
A property appraisal and home inspection typically occur after the offer is accepted. The appraisal assesses the home’s value and is usually ordered by the lender.
Depending on the property size, the appraisal itself is usually completed in a few hours. However, it can take the appraiser up to seven days to review comparable, recently sold homes in the area and create a report of the home’s assessed value.
Home inspections are not required, but are recommended as they can uncover costly problems with the house. Inspections can be performed in a few hours, but you may have to wait up to 10 days for a report of the findings.
Closing on the house
You’re almost at the finish line! The average time to close on a purchase loan was 45 days in August 2020, according to Ellie Mae data. On the closing date, set aside an hour or so to review and sign all of the loan documents.
Once you’ve signed the last one and you have the keys in your hand, you’re officially a homeowner.