If you’re ready to purchase a home, you may be wondering just how long the process will take. After all, it’s possible you need to figure out some of the logistics of your move.
You may need to decide whether to ask your landlord for an extension on your lease, for example. Or, perhaps you need to think about your child’s school schedule or how much notice to put in at your job. With this in mind, it’s smart to learn and understand how long buying a house usually takes.
While the timeline of any home sale can vary based on a broad range of factors, each step can be fairly predictable on its own. As you plan out the next important steps of your life before a big move, here’s how much time you should plan on waiting for each step of your home sale to progress.
Prepare Your Credit for Homeownership: Zero to Twelve Weeks
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While the credit score required to qualify for a mortgage can vary depending on the lender and whether you take advantage of a government-sponsored mortgage program, you will always have a better chance of qualifying for a loan with the best rates when your credit score is good.
According to myFico.com, consumers with FICO scores of 740 or above have the best chance at qualifying for a home loan with excellent terms and a low interest rate. Meanwhile, consumers with “good credit,” or FICO scores between 679 and 740, may or may not receive the best terms. Anyone with a score below that level has a much worse chance at qualifying for one of the best home loans on the market.
That’s why, if your credit score isn’t great, you should work on improving it before you apply for a home loan. The most important steps you can take to improve your credit include:
- Get a copy of your credit report and check it for errors. You can get a free copy of your report from all three credit reporting agencies — Experian, Equifax, and TransUnion — for free each year at AnnualCreditReport.com.
- Pay all your bills on time. This is important since your payment history makes up 35% of your FICO score.
- Pay down debt. Since many credit scoring models consider how much debt you have when determining your score, paying down some of your existing debt may help improve your credit score in the short-term and the long haul.
If your credit score is already good or excellent, you can skip this step altogether. If it’s not, you have some work to do.
Get Pre-approved for a Mortgage: Several Days to Three Weeks
Your credit score is ready for a mortgage, so now what? Your next step is checking in with mortgage providers to get pre-approved. There are a few reasons you should bother getting approved for a home loan before you start shopping. First, getting preliminary preapproval for a mortgage can help you discover how much money the bank is willing to lend you. This figure or range of figures will help you learn the price range of homes you should search for.
Second, you will have much better luck getting an approved offer on a home if you’re already pre-approved for a mortgage. Having a pre-approval letter tells sellers you are financially able to purchase the home, and a letter can put you at a huge advantage if you wind up competing against other buyers who aren’t pre-approved.
As you prepare to get pre-approved for a home loan, make sure you’re checking with several different lenders so you can compare interest rates and fees. Some websites even let you enter your information once to receive several offers from lenders who are competing for your business. Make sure to research lenders and mortgage websites that connect you with multiple home loans before you decide who to work with.
To get pre-approved for a mortgage, you typically need to supply at least one month of pay stubs, employment information for the last two years, two years of W-2s, one or two years of tax returns, three months of bank statements, and even more information if you’re self-employed.
Keep in mind that this step can take a few days or several weeks. Make sure you have a pre-approval letter in your hands before you move onto the next step.
Finding a Home and Getting an Accepted Offer: Varies
Once you’re pre-approved and have a good idea of how much house you can afford, it’s time to start searching for your dream home. Unfortunately, this is one step that can vary dramatically in length and scope. You might find the perfect home on your first day of searching, but you could also spend months searching for a home you actually want to buy.
You’ll obviously want to work with a real estate agent during this part of your journey. Not only can a real estate agent help you find homes in your price range, but they can set up times for you to enter and inspect homes you’re interested in.
Once you find a home to buy, you can also rely on the help of a realtor to write up an offer. This part of the process can also take days or weeks depending on how quickly the sellers respond. They might submit a counteroffer that requires you to think long and hard about the home sale for a few days. Heck, you could each submit several counteroffers back and forth, each taking a few days to execute.
Closing on Your Home: Thirty to Fifty Days
Once you have reached an agreement with the home’s seller, you’ll begin moving toward the closing of your home. During this step of the process, your lender may need more financial paperwork that helps them verify you qualify for the loan. For example, you may need to submit additional or more up-to-date bank statements or pay stubs to prove you are still in the same financial position as you were when you were pre-approved for your loan.
While you’re waiting to close on your home, you’ll also want to hire a home inspector to look over the property to check for needed repairs. At this point, you may also negotiate back and forth with the seller to agree on who will pay said repairs and if any concessions should be made.
Sometimes closing takes as little as one month, but it can often take a lot longer than that. Either way, it helps to get back with your lender quickly if they ask you to submit additional documentation. You don’t want to leave them waiting and prolong the process unnecessarily.
Once your closing date arrives, you’ll sit down with all parties (lawyers when applicable, buyer and seller’s real estate agent, title company, the closing agent, and perhaps even a representative of the lender). You’ll sign all the important documents pertaining to your home loan and you’ll also bring money to the table to cover your share of closing costs and your down payment. Once you’re done, the keys and the home are finally yours.
The details above describe what usually happens when someone purchases a home, but there are a ton of variables that could throw these timelines out of whack. You may find you have trouble qualifying for a mortgage altogether, for example. Or maybe you spend months or years finding a home you like!
Whatever hurdles you encounter, make sure to keep your credit score in good shape and continue saving for a down payment. The better financial shape you’re in, the better chance you have at winding up with the home of your dreams.