How Long It Takes To Buy A House: A Purchase Timeline From Preapproval To Closing
Nov 30, 2024
7-MINUTE READ
AUTHOR:
VICTORIA ARAJThe search for a new home may seem like a long and overwhelming journey – maybe so daunting that you find ways to avoid taking the first steps. But the truth is, buying a house doesn’t have to be as long of a process as you may think.
Let’s discuss how long it really takes to buy a house and what steps are involved.
The Quick Answer: How Long Does It Take To Buy A House?
It’s nearly impossible to predict exactly how long it will take to find a home, get an offer accepted and close on a house, especially when there are so many moving parts to the home buying process. It could take anywhere from 6 months to a year depending on the current real estate market and what kind of home you’re looking for.
If you’re planning on buying and selling at the same time, make sure you have a place to stay if you happen to have trouble finding and buying a new home.
Home Buying Timeline: Steps And Time Frame To Purchasing A Home
Step 1: Save A Down Payment And Prepare Finances (A Year Before)
If you need a mortgage, before you step foot in an open house, be sure to take a look at your financial situation. Depending on how you manage your finances, you might sail through this step in a day or two. Here’s what you need to do:
- Find your credit score and review your credit report.
- Save cash for your down payment and closing costs.
- Start to get a picture of how much house you can afford by experimenting with various mortgage calculators.
- Avoid new debt, which will raise your debt-to-income ratio (DTI).
- Organize your paperwork. You’ll need your W-2s, tax returns, bank statements and pay stubs to get preapproved.
Step 2: Get A Mortgage Preapproval (A Day Or Two)
Unless you’re able to make an all-cash offer on a home, you’ll need to get approved for a mortgage to finance the purchase.
The first step toward getting a mortgage is applying for preapproval. You’ll need a preapproval before you start seriously shopping for a home. Your lender verifies some of your financial information, including your income, your credit history and current debt to determine how much home you can afford when you apply. That means you’ll need to submit specific documents for the mortgage preapproval, such as pay stubs, bank statements and tax returns.
Don’t confuse prequalification and preapproval. A prequalification is useful when you’re in the early stages of buying a home and trying to figure out a budget, but you’ll need a preapproval when you’re shopping for a new home.
Your lender then issues you a preapproval letter with an official estimate of how much of a loan they’re willing to offer you. Your preapproval letter indicates that you’re serious about buying a home and helps you to strengthen your offer by showing the seller that you have the financial means to afford the home.
What Is A Verified Approval Letter?
At Rocket Mortgage®, we take your approval application very seriously. During our Verified Approval1 process, we’ll pull your credit and ask for documentation verifying your income and assets, including your W-2s, income tax returns, pay stubs and statements for any accounts you want to use as assets.
Most preapprovals are based on automated systems. The Verified Approval process, on the other hand, includes review by an underwriter.
Because we take the time to verify the information you provide, our Verified Approval Letter is a strong indication that a borrower who has been approved will close on the mortgage. This Verified Approval Letter will separate you from the rest of the mortgage-seeking pack. In fact, if through no fault of your own your application doesn’t lead to a closing, we’ll pay you $1,000.
Step 3: Shop For A Home (6 Months To A Year)
- The longest part of the buying process is often the hunt for the right home. If you’re looking for a home in a hot real estate market, expect to spend months – or even a year – finding a home.
- The best way to fast-track your shopping process is to work with a real estate agent. With your preapproval letter in hand, you can begin meeting with real estate agents.
- Agents act as your eyes and ears when you’re house hunting. For this reason, understanding what a real estate agent does and choosing an agent you trust is crucial to your success in the marketplace. You’ll need to trust the ethics, expertise and judgment of your agent when making one of the most important decisions of your life.
While you’re getting your financial history sorted out, you should figure out where you want to live. Consider your lifestyle and do your research. Check out the neighborhoods and the school systems of the area you’re considering. Talk to friends and family about what they like and don’t like about where they live.
Once you decide that you’re ready to buy a house, how much you can afford and where you want to live, there are five main steps to complete before you can call a house your home. Let’s review them.
Step 4: Make An Offer On A Home (Less Than 1 Day)
Your real estate agent can help you make an offer when you find the right home and you’re ready to buy. Your real estate agent will handle the job of writing an offer letter, which lays out the terms of the sale.
If you’re making an all-cash offer, you should consider attaching a proof of funds letter to your offer to show the seller that you really do have the cash on hand needed to complete the sale. If you’ll need a mortgage to complete the sale, you’ll attach your preapproval letter to your offer to show you’ve been vetted by a lender for the amount you are offering and are creditworthy.
Be prepared for sellers to accept, reject or counter your offer. Your real estate agent will guide you through these ups and downs.
Step 5: Complete The Mortgage Application Process (About 1 Month)
Once your offer is accepted and you have signed a purchase agreement, you’re ready to complete the mortgage application process. You’re well on your way to closing on your house!
Assuming there have been no major changes in your financial situation, it’s the house you’ve chosen that needs to be vetted. You’ll want to order a home inspection during this time.
Most lenders require 30 – 45 days to finalize the details of your loan and to make sure your home meets your loan’s minimum requirements. Your lender will schedule an appraisal and underwrite your loan during this time.
Let’s look at each of these steps in a little more detail.
- Home Inspection
- Home Appraisal
- Underwriting
Home Inspection
A home inspection isn’t the same thing as an appraisal. An appraisal gives you a professional opinion of a home's worth. An inspection gives you information about what needs to be repaired or replaced.
Even if you agreed to waive the home inspection contingency to make your offer more attractive, you’re still entitled to a home inspection to help you plan for the expense of any needed repairs. If the house needs repairs that you can’t afford, you can still walk away from the sale. You may lose your earnest money if you choose to do so, but you can’t be compelled to complete the sales transaction.
Most mortgage lenders don’t require home inspections as a condition of getting a loan, but they might if the appraiser identifies areas of concern. Department of Veterans Affairs (VA) loans require pest inspections in some parts of the country.
The Appraisal
An appraisal is a professional opinion of how much your home is worth. Mortgage companies typically require that you get an appraisal before you can get a loan, although some programs do offer property inspection waivers (PIWs).
Appraisals are common practice, however, because the appraisal ensures that you aren’t paying more money than your home is worth. These examinations are usually more focused than a broad home inspection. For example, if the appraiser notes a potential issue with the foundation, your lender may require a licensed foundation inspection to be completed. The appraiser who visits the home will always be a licensed independent third party who can ensure a fair market assessment.
Depending on the property and mortgage type, appraisals can vary in how they are done and what is required. Some homes require a full inspection appraisal and others might be approved with desktop appraisals, which do not require a physical inspection of the property.
Underwriting
Your lender verifies your income, assets and debt to make sure that you qualify for a loan during the underwriting process. Once your lender finishes underwriting your loan, the underwriter can deny your loan or issue you your final mortgage agreement.
During the underwriting process, your lender will check your credit report and review your asset statements, your appraisal, and your income documentation. This process could require interaction from you depending on your situation. It is important to stay tuned into your loan during this process and provide documentation promptly if requested to ensure your loan moves smoothly.
Step 6: Close On Your Loan (About 1 Week)
It’s time to close once your appraisal clears and your lender finishes underwriting your loan. Your lender will first issue you a document called a Closing Disclosure. This document outlines the final terms of your loan, including your APR and what you must pay in closing costs.
Read over your Closing Disclosure and acknowledge that you’ve read it with your lender. By law, your lender must give you at least 3 days to read your Closing Disclosure before the closing meeting.
After the 3-day window passes, your lender will schedule a closing meeting. You’ll sign your loan papers, pay your down payment and closing costs and take control of your new property. You can ask any last-minute questions about your loan agreement.
You’re officially a homeowner after you finish up your closing meeting.
The Bottom Line: Your Home Buying Timeline Can Vary
Buying a house is a major undertaking, and it could take you about a year to go from your current home into a new one depending on a variety of factors. The first step in your home buying journey is getting initial approval to show agents and sellers that you’re ready to buy.
1 Participation in the Verified Approval program is based on an underwriter’s comprehensive analysis of your credit, income, employment status, debt, property, insurance and appraisal as well as a satisfactory title report/search. If new information materially changes the underwriting decision resulting in a denial of your credit request, if the loan fails to close for a reason outside of Rocket Mortgage’s control, or if you no longer want to proceed with the loan, your participation in the program will be discontinued. If your eligibility in the program does not change and your mortgage loan does not close, you will receive $1,000. This offer does not apply to new purchase loans submitted to Rocket Mortgage through a mortgage broker. This offer is not valid for self-employed clients. Rocket Mortgage reserves the right to cancel this offer at any time. Acceptance of this offer constitutes the acceptance of these terms and conditions, which are subject to change at the sole discretion of Rocket Mortgage. Additional conditions or exclusions may apply.
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