You typically need a few months for the whole first-time home-buying process. It often takes between 6 and 8 months of research in the local market on average to find a home, close a deal, and buy a home, from beginning to end.
First-time home buying can thus take between a few weeks and several months from home searching to signing title contracts. The type of home you’re interested in, the time of year, and the current cost of living in your desired area can all impact how long it takes. There are a lot of steps that must be completed, such as getting a mortgage preapproval, researching for the right home, and getting it inspected and appraised until you can finally say you own the keys to a home and be officially a homeowner.
The more organized you are, the quicker the process will go. For instance, if you have all your documents, like tax returns, ready related mortgage pre-approval, the next step is for your lender to set an offer for the chosen type of mortgage. With the preapproval letter, you’ll have a guide to the terms and how much home you can afford. Then comes finding a home!
An Expert Can Help
A lot depends on the buying process and on the type of home that fits your needs and falls within the price you have set. In the current tight housing market with high mortgage rates, it can take a while to find the right property for you. An agent can help streamline this process and provide valuable insights into potential properties. You might need to be patient but also watchful of opportunities that may arise. This is where open houses become a useful tool.
Holding the keys to a successful purchase often begins with a thorough review of your credit score, your needs, and your finances. Always prioritize the first step: to find an agent who understands your vision and personal finance, as they will be instrumental during the house hunting journey.
Additionally, it’s wise to review other aspects of your financial health, like ensuring you have the best life insurance and understanding where to secure the best personal loans if needed.
Here are the steps to buying a house you can afford from start to finish.
Home Buying Considerations
When buying a house, you must take a careful look at your finances and assess how much money you make and how much income you can dedicate to mortgage payments. If you already pay for personal loans such as car loans, student loans, and credit card debts, you should include these in your debt mortgage calculator.
Once you know how much you can afford to pay in monthly mortgage payments, you know how much you can afford. The buying process needs patience and time to close until you become a homeowner.
You can then make a list of your needs and the ideal location for your home. If you have children, consider neighborhood schools and activities. If you want something close to your business, check what’s available around your work location.
Before you start looking for homes, assess how big your ideal home should be, the number of bedrooms, and other necessary amenities for you and/or your family.
Mortgage Pre-Approval: 1-2 Weeks
If you need a mortgage to purchase a home, you will need to get pre-approved.
Gather all the necessary information, including pay stubs and bank statements.
Present financial proof to the lenders of savings to show how much down payment you can make.
Have all documentation available for current debts and payments you are making (student loan, car loan, etc.) because these will determine your debt-to-income (DTI) ratio.
Find the Right Real Estate Agent: 1-10 Days
The pre-approval process tells you how much money your mortgage lender will lend you. This will help narrow down the properties you can afford.
With getting preapproved, you are ready to find the right real estate agent. You want your real estate agent to be responsive, experienced, and professional. If the local property market is very tight, real estate agents might be unavailable and it could take a few days to find the real estate agent who matches your needs. A real estate agent can make or break your search for the perfect home.
Find Your Home: 1-4 Months
Now begins the search for your home within a timeline that you will set. You know how much money you have and what sort of home you are looking for. Your real estate agent will show you houses and condos around the area that interests you. You could then view the ones that best match your expectations.
There might be tradeoffs: a larger home but slightly farther away than you initially thought or a smaller house that’s close to an excellent school and in a great neighborhood. In such cases, you will need to check each house and see how it feels and whether it fits your needs.
Make an Offer: 1 Week to 10 Days
Once you find a real property that ‘clicks,’ you must make an offer.
Making an offer doesn’t necessarily mean that the seller will accept it. Being able to make a competitive offer can be crucial at this stage. There might be some negotiating or you might have competition from another prospective home buyer offering more money. A seller can accept, negotiate, or decline your offer, so you should be prepared for all eventualities.
Once an offer is accepted you are ready to buy the property.
Here’s how to improve your chances when you make an offer:
- If you can pay cash, this will typically speed up the process as many sellers appreciate a quick and easy home-selling process.
- A pre-approval letter from your lender shows credibility when you make an offer on a home.
- The earnest money — the money you put down to confirm you are interested and serious about your offer — can make a big difference. If you increase the earnest money you are willing to pay, you show determination, which can make your offer more appealing.
Loan Approval: 4-8 Weeks
Once you have made an offer and it’s been approved, you can get your loan approved from the bank.
You must submit the documentation for the home you plan on buying and any other document or paperwork your lender requires to complete the underwriting process and approve your loan. Remember, the Certificate of Deposit (CD) rates also matter, as the best CD rates guarantee a lower interest rate.
It’s typical for the loan approval step to take up to two months. In the meantime, you can begin home inspection and home appraisal. By the time your mortgage loan is officially approved, you will have all the correct paperwork finished and you will be ready to sign the final contract.
Depending on how long it takes for verifications, this stage could take longer. Having access to resources like NMLS Consumer Access can smooth the process and help you avoid pitfalls.
Home Inspection and Home Appraisal: 2-4 Weeks
The home appraisal is organized by your lender to determine the value of the home which should match the amount of money you are borrowing. If the value of the home is less than the money you are borrowing, it means you are paying more money than the home is worth. Your lender may then ask you to increase your down payment. Ideally, the home appraisal will show that the house or condo is worth more than what you have agreed to pay.
Home inspection
The home’s value appraisal shouldn’t be confused with the home inspection, which is done by you to assess the state of the property.
A home inspector checks the foundation, walls, roof, insulation, HVAC, plumbing, heating, and electrical systems to check if there needs to be any home improvement. They will notice if there are signs of water damage or if the roof is leaky. They will also write down if there is any type of termite or rodent infestation or any other issue with the safety and integrity of the home.
Depending on the report from the home inspection, you may need to negotiate with the seller if unforeseen problems occur that will require you to remedy them in the future. You can, for example, ask the seller to make the repairs before you close the deal.
Close the Deal: 1-2 Days
The closing date process usually takes a couple of hours — but give it a day or two if some unexpected delays occur. In some cases, it may even take a few more days to complete.
You sign the papers, make the down payment, and pay the closing costs for the closing process. The escrow company will free the mortgage money and you are now officially a homeowner. At last, you can move into your new home!
Can You Speed up the Process?
Some actions can speed up things, such as purchasing a home with cash or buying a home in a less popular area like a rural location. In urban centers where the property market is tight, you might have to make several offers before one is accepted, especially for a first-time homebuyer. Moreover, the type of loan plays an important role in your final walkthrough.
Always make sure to go over the closing disclosure meticulously before finalizing the purchase. Understand the time it might take to buy and the typical duration it may take to close a deal. Securing the right homeowner’s insurance is a pivotal component, ensuring protection for your new investment. Opting for a reputable service to guide you through can make all the difference.
Lastly, always review your credit periodically, as it plays a significant role in determining the terms of your mortgage. With thorough preparation and understanding, you’re well on your way to a smooth home-buying experience.
Avoid common mistakes
Finding the right home can be daunting, especially for first-time home buyers. Many prospective homeowners wonder how to avoid common mistakes and how money market accounts factor into the process.
To avoid pitfalls, you should conduct thorough research, engage with experienced professionals, and ensure financial readiness. Money market accounts can offer a safe and liquid option for saving funds, like your down payment, while earning some interest.
With the right lender like Society Mortgage to have your back, you know you are in good hands to get a home. Once you have found the property that fits your lifestyle, you are ready to start your home-owning adventure.
Still looking to buy your new home at a guaranteed seller’s market? Society Mortgage will help you find equal housing opportunity to get the best out of your purchase. Contact a mortgage loan officer and start your homeownership journey today!
