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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. Saving a down payment, getting a mortgage preapproval and researching the neighborhood you want to live in ahead of time can help you avoid unnecessary delays.
Getting your finances in order
If you make a cash offer, buying a home can take as little as two weeks. Buying a house 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 might aim to put down at least 20%. While the typical cost of a down payment varies depending on where you live, it could take a household earning the median national income of $68,703 a full 21 years to save 20% plus closing costs, according to U.S. Mortgage Insurers, an association representing private mortgage insurance companies. That’s to buy a hypothetical home for about $300,000. Saving 5% would take the same household seven years.
Want to become a homeowner sooner? Look into loans that allow some borrowers to buy a house with no money down, like VA or USDA loans. You may also be able to qualify for local and state down payment assistance programs.
» 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 the impact to your credit score.
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. Buyers typically searched for eight weeks and toured a median of nine homes, according to a 2021 report from the National Association of Realtors.
Making an offer
A few days or longer
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.
Underwriting and closing
46 days, on average
The closing process begins after the seller accepts your offer and the house is under contract. The average time to close on a purchase loan was 46 days in August 2021, according to mortgage data provider ICE Mortgage Technology. The length of time varies depending on the type of loan and the time it takes for you to complete the steps listed below.
Going through underwriting: Over a week
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.
Appraising the house: Up to a week
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.
Inspecting the home: Seven to 10 days
Home inspections are not required but are recommended as they can uncover costly problems with the house. Home buyers usually have seven to 10 days after the offer is accepted to conduct the inspection. While inspections can be performed in a few hours, you may have to wait up to 10 days for a report of the findings.
Conducting the title search: Two weeks
A title search determines who legally owns a property and if there are any claims on it. It can take about two weeks for a title search, but the length of time can depend on the type of property and transaction.
Getting ready to close: At least three days
You’re almost at the finish line!
At least three days prior to closing, your lender will require that you get homeowners insurance to protect your home and belongings. Also a minimum of three business days before closing, you will receive a Closing Disclosure, which outlines all of the details of your mortgage loan. Compare the Closing Disclosure with your Loan Estimate to make sure all of the information is accurate.
Then, 24 hours prior to closing, it’s recommended that you conduct the final walkthrough, which is your last chance to see the property before you buy it. Make sure all the systems in the house are working, including heating, plumbing and electrical. Also, check if the seller has conducted any repairs they agreed to make.
On the closing date, set aside an hour or so to review all of the loan documents. Once you’ve signed the last one and have the keys in your hand, you’re officially a homeowner.