How Long It Takes To Buy A House: A Purchase Timeline From Preapproval To Closing

Are you crammed into a home too small to meet your pandemic-related needs? Living with your parents? Able to choose where you live because of your job? If so, you may be daydreaming about owning your first, or next, home.

The 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 take a look at how long it will really take.

In light of current market conditions, you should plan to spend about a year choosing and buying your next house. Most of that time is spent finding the home you want.

When we first heard of the coronavirus in the spring of 2020, some experts predicted that the housing market would cool, if not collapse. The opposite happened.

The number of home buyers in the market actually soared. At the same time, many homeowners chose to stay put in their homes until the uncertainty of the pandemic cleared.

As a result, the forces of supply and demand took over to create a long-term seller’s market for housing. In many parts of the country, buyers have engaged in bidding wars to secure a home, offering above asking price and waiving contingencies typically included in a purchase agreement to protect buyers, like the home inspection, appraisal and financing contingencies.

For this reason, it’s nearly impossible to predict how long it will take to find a home and get an offer accepted. Experts are predicting that the housing market will cool somewhat in 2022, but no one thinks that the seller’s market will swing toward buyers anytime soon.

The good news – if you already own a home and are planning on buying and selling at the same time – is that you’ll probably have no trouble selling your current home. To be safe, just make sure you have a place to stay should you have trouble buying a new home. 

There is plenty you can do to prepare yourself for house hunting to shorten the time it takes to own your next home.

Organize Your Finances

If you need a mortgage, before you step foot in an open house, take a cold, hard 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
• 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.

Figure Out Where You Want To Live

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. Familiarize yourself with both the pros and cons of buying a house.

If you’re sure you’re ready, 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. You’ll shorten the house hunting process if you’re focused about where you want to 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 four main steps to complete before you can call a house your home. Let’s review them.

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 or all 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 letter with an official estimate of how much of a loan they’re willing to offer you.

What Is A Preapproval Letter?

Your preapproval letter indicates that you’re serious about buying a home. Agents and sellers know you won’t have trouble getting a loan after your offer is accepted. Your preapproval letter helps you to strengthen your offer when you find the right home by showing the seller that you have the financial means to afford the home.

Applying for a preapproval usually doesn’t take much time. Many lenders allow you to apply for a loan online in as little as an afternoon. Make sure you answer all your lender’s questions, submit all required documentation and respond to phone calls and emails in a timely manner. It’ll ensure the speediest preapproval possible.

What Is A Verified Approval Letter?

At Rocket Mortgage®, we take your approval application very seriously. During our Verified Approval process¹, 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.

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 your application doesn’t lead to a closing, we’ll pay you $1,000.

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.

More than ever before, agents act as your eyes and ears when you’re house hunting. Depending on the real estate market you’re shopping in, you might not have an opportunity to visit the home in person. In that case, you’ll need to rely on photographs, virtual tours and your agent’s assessment of the home before deciding whether you want to make an offer.

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.

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. In the pandemic housing market, your agent will probably advise making an offer over the asking price, waiving contingencies and being flexible on terms like the move-in date.

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 and are creditworthy.

Many home buyers in this market have cobbled together the cash to purchase the home and then applied for delayed financing after the mortgage has seasoned (usually 6 months).

In a more balanced market, sellers and buyers might haggle over details like the price, closing costs and any repairs that need to be made before closing. When the market is once again in an equilibrium, and both buyers and sellers have some power to negotiate, sellers might accept, reject or counter your offer.

With your purchase agreement signed, you’re ready to complete the mortgage application process. Assuming there have been no major changes in your financial situation, it’s the house you’ve chosen that needs to be vetted.

Get ready to close on your mortgage loan when you reach an agreement with your sellers. 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. You should also order a home inspection before your close.

Let’s look at each of these steps in a little more detail.

The Appraisal

An appraisal is a professional opinion of how much your home is worth. Mortgage companies require that you get an appraisal before you can get a loan. This is because the appraisal ensures that you aren’t paying more money than your home is worth. 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.

Most of the underwriting process happens behind the scenes. Your lender will check your credit report and comb over your bank statements. You usually won’t need to participate in the underwriting process if you’ve submitted all the correct documentation.

Your lender may contact you for more information or to submit more documentation. It’s important to respond to all inquiries quickly to ensure a timely closing.

Home Inspection

A home inspection isn’t the same thing as an appraisal. An appraisal gives you a professional opinion of a home’s is 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’ll 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. VA loans require pest inspections in some parts of the country.

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.

Buying a house is a major undertaking, and in the current market, it’ll take you about a year or more to go from your current home into a new one. The first step is getting preapproved to show agents and sellers that you’re ready to buy.

Ready to become a homeowner? Start your Verified Approval  process today!

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..