How long does it take to buy a house? This is the most frequently asked question when one is getting ready to buy a house.
It would be nice if they could take care of everything in a matter of days, however, there are several working pieces to the home buying process and finding a house you can afford.
Let’s look at some of those reasons it may take some time to purchase a home.
Getting pre-qualified for a mortgage is not a guarantee for a mortgage loan, however, it is still a good idea and a good place to start before you find a house. First, the steps to get pre-qualified do not take long. All you have to do is answer a few basic questions:
- Name and Date of Birth
- Your income,
- Things you own (assets)
- And amounts you owe out (debts).
- Length of time on your job
At this stage, they do not require you to show actual proof of the information you are providing because they do not do an in-depth inquiry to verify your information.
The purpose of the pre-qualification is basically just to find out if the bank or loan company would even work with you, and to get an idea of how much you could borrow. Of course, this is all based upon the information you have given.
Usually, you can do all of this right online.
However, if you are seriously considering buying a home, one of the first things you should do is get pre-approved for a mortgage.
In doing this, the lender will tell exactly how much you can borrow based upon the hard-copy proof you have provided. This will include your income, assets, credit history, rental history, and debts.
Getting pre-approved is a smart move to do before looking for a home because you do not want to fall in love with a house outside of the price range.
Knowing how much they have approved you to borrow will help you make wiser decisions when looking for a home.
A pre-approval letter also shows the real estate agent and the seller you are serious about finding a home.
Another reason getting pre-approved is a smart move is because it will inform you of things you need to fix such as paying down your loans or credit cards or fixing errors found on your credit report.
You will also find out the interest rate you can expect to receive and other mortgage-related information.
Because of the thorough review, the time frame can take up to three days to receive a loan estimate from the lender.
What Information Will The Lender Want From Me?
Mortgage lenders will usually want to know about:
- Your assets: such as cash and cash equivalents: certificates of deposit, checking, and savings accounts, money market accounts, physical cash, Treasury bills, etc.
- Bank statements
- Your debt to income ratio: This will show the percentage of your income that is being used to pay bills. There are several online calculators that you can use to find out where you stand before going to meet with a lender. If you see that most of your money is being used to pay on bills you may want to come up with a plan to decrease the amount you owe or even better pay some of your bills off before meeting with the lender.
- Your credit history: The lender is looking to see if retailers, banks, loan companies or credit card issuers have provided money or service to you and whether you could pay them back as agreed upon.
With loaning money, most people would not even want to lend $50.00 to family or friends, who they knew had a bad history of paying people back their money. So, you can imagine how a mortgage lender feels about letting someone borrow $150,000 or more when that person’s credit report shows a history of not paying back money owed or always paying debtors late.
If your assets, income to debt ratio (how much money you are bringing in compared to how much money you are paying out) and credit history are all in good standing, the pre-approval process should only take a few days to get approved.
However, if they are not, this does not mean it is impossible to buy a house.
Come up with a plan to fix things on your credit report that are fixable. Doing this, will not only decrease your debt but over time it will also raise your credit score. This will help improve your chance of getting pre-approved for a home the next time you try.
How Long Does It Take to Buy A House?| Finding Your Dream Home?
Once they have pre-approved you, it is time to start house shopping! To assist you in this venture, you will want to find a knowledgeable real estate agent.
Although you may find the perfect agent, there are still things that may slow you down in finding the perfect home:
Things such as
- Desired location and the number of homes available in that location.
- Home buying competition
- Finding a home with your specific needs and features
- The time of the year or season
You may quickly find the perfect house, however, be prepared to practice patience as you search for your new home. This part usually takes a few days to a few months.
One of the worst things you could do is make a hasty emotional decision. It’s best to be sure and without a doubt that you are picking the best home for you and your family.
Once you have found the home you wish to buy, your real estate agent will discuss with you the seller’s asking price and the price you should offer to the seller-This is the negotiation part of the process.
Once receiving the offer, the seller normally responds in 24-72 hours depending on the state you live in.
The seller can refuse your offer and present to you a counteroffer or stick with the original offer.
There may be cases where you and the seller will go back and forth with offers until they make a final negotiation, or you look for a different home.
However, in most cases, this part of the process typically takes a week or less.
You have finally found the perfect home…the offer has been made and accepted. Now what?
Before purchasing the home, a home inspector will go to the home to check for any issues with the property that may need repairing.
This will be a very thorough inspection of the home that covers both big and small problems.
The good thing is that they usually complete the inspection within a few hours. The inspection itself should not delay the buying process.
However, if they find serious problems, this may slow things down, depending on who will pay for the repairs.
According to the American Society of Home Inspectors’ (ASHI), there are 12 things the inspector will check:
- Heating systems
- Central air conditioning system (temperature permitting)
- Interior plumbing and electrical systems
- Attic, including visible insulation
- Windows and doors
- Structural components
It is better to find out beforehand whether the home you are choosing has problems that will need repairing than to find out later down the line.
You want to enjoy the decision that you made and not deal with regret over the purchase later.
The Appraisal Process
You are getting closer to moving into your new home but before you do, this next step is a very important step-Discovering the true value of the home.
When an inspector goes out to the home, he is checking to make sure everything is in tip-top condition or whether things needing fixing. However, when an appraiser goes out to the home, he is not just looking at the condition of the home but the true value of the home.
He is looking at many factors. For example, he looks at how much other comparable and similar homes in the area sold for within the last few months. This gives him an idea of how much the home is worth.
Case in point, suppose other comparable homes in the area sold at 200,000 but the seller wants to sell you his home at $300,000. Would that not raise eyebrows?
The same number of bedrooms and bathrooms, the same size living space, the same style of garage, the same yard size-You probably would feel very upset if you purchased the house, and later found out that you way overpaid for it by a $100,000.
This is just one thing that an appraiser checks for. It’s truly to your benefit that he does. There are many other things that an appraiser looks at, to come up with the value of the home, but we will discuss them at another time.
Hopefully, though, you can see why having the house appraised is a very important step in the home buying process.
With things being so expensive these days, I’m sure you would want to keep just as much money in your pockets as you can.
Ok, they have pre-approved your loan; you have found the house; someone has inspected it and appraised it…everything is looking good. Now it’s time to remove the “pre” from pre-approved and have that status changed to “approved”.
To do this, the loan information needs to go to an underwriter. An underwriter is someone who does a final check making sure nothing has changed since the pre-approval up to now.
For example, he may check for changes in your credit score or loss of employment. He may also check for a change in income or down payment amount. The underwriter will also check the appraisal value of the house or for problems with the condition of the property.
A closing process can take anywhere for 30-45 days to receive a closing date.
Once they have completed everything, the underwriter will issue you a letter known as a commitment letter. This letter means you have been “cleared to close” and they now approve your home loan!
However, sometimes, the commitment letter may have some stipulations to it. Meaning there may be some things they are requiring you to do or fix something before they give you the final “clear to close”.
Your agent should discuss this with you if this happens.
Once everything has closed, you, your agent, and the seller can now discuss your move-in date. This normally takes just a matter of days before you can move in.
As you can see, there are several pieces to becoming a home buyer. Therefore, it would be difficult to answer the question “How long does it take to buy a house?” However, being prepared can definitely speed up the process and make the wait seem not as long.
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