How Long to Buy a Home
Every year more than 5.5 million homes are bought and sold in the United States. It’s the biggest purchase the average person makes in their lifetime and something that could have an impact on the rest of their lives.
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It’s not a process you should rush into nor is it one that you should enter unprepared. In this guide, we’ll look at the steps involved with buying a home, from working with the mortgage lender and getting a mortgage preapproval, to paying the purchase price, hiring a moving company, and cutting the hypothetical red ribbon on your new home.
Time Frame for Buying Home
You don’t need to rush yourself when buying a home. This is especially true for first-time buyers, who are new to the experience and may find it more stressful than someone who has purchased multiple properties.
On average, when accounting for everything from home shopping to a preapproval letter, mortgage loan, paying the closing costs and then crossing the threshold as a new owner, the time frame is as follows:
Preparing to Buy
Before you buy, you need to ensure your finances are in check and you can afford to cover the down payment, mortgage payment, closing costs, homeowner’s insurance costs, and everything else. Check your credit report, work on your credit score, and speak with a mortgage lender to get a preapproval if you can.
This process can take anywhere from a few weeks to a few months, depending on where your finances are before you begin.
Searching for the Right Home
It takes the average homeowner between 2 and 3 months to find the right home. They spend weeks trawling through online listings, speaking with real estate agents, and viewing houses. The average home has around 5 showings a month and will sell in around 4 months, which equates to an average of 20 showings before a sale.
The average buyer will look at a single house at least twice before purchasing and most will see it 3 or 4 times. They may visit dozens of houses before they find one they like. This process typically takes between 2 and 3 months to complete, at which point the average buyer has found their ideal home and is ready to begin with step 3.
Many prospective buyers will lump number 1 and 2 together and only concern themselves with budgeting and affordability when they actually start looking. There isn’t much wrong with this, but it can create some problems for some individuals. For instance, you may discover that your finances are not as great as you thought they were, which can delay your search by a year or more and render all that research and all those showings pointless.
The negotiation process may take a week or more depending on how quick the seller is and how receptive they are to your offers. Most sellers will respond in 48 hours and most negotiations will complete within a week, but this time frame can vary greatly.
The home inspection can take just a few hours to complete, but the inspector needs time to write and file a report. You also need to schedule them and, based on their availability, you may need to wait several days for the inspection. In most cases, this process will be over within 2 weeks.
If the inspection finds any issues and these issues impact the house price, you can make a counteroffer, which will prolong the process by a few days.
It takes around 4 weeks, on average, to go from the first offer to the closing. At this point you need to pay the closing costs, prepare and sign the paperwork, and start the process of making the purchase legal.
The contract will state how soon you can move in, but as soon as those papers are signed you are legally the new homeowner and can start thinking about getting the keys and moving in.
When is the Best Time to Buy?
If you want to avoid the drama of moving at Christmas or during the winter, then the Spring or Summer is a great time to buy. However, as discussed in our guide to When is the Best Time to Buy a House, this is not a good idea financially.
The vast majority of buyers start looking for houses during the Spring, with April and May being some of the busiest periods and with the last Friday in May being the most hectic for closings. If you buy during this time then you’ll struggle to negotiate a good price, you may face more counteroffers and competition, and you’ll also struggle to find cheap representation and moving services.
Conversely, if you wait until September, around the first week of Fall, you’ll enter a market that has fewer buyers, more desperate sellers, and more available representation. Moving will be cheaper, discounts will be more common, and homeowners may be more receptive to negotiation.
It may be a difficult time if you have kids, as that’s when they go back to school and there’s a good chance you’re finishing a very busy summer holiday period, but that’s why this time of year is so quiet and why so many opportunities exist for resilient homebuyers.
Process of Buying a House
We’ve discussed what sort of time frame you can expect when buying a house, but how can you prepare for this each step of the way, what do you need to know, what complications can you expect and is there anything you can do to ease your burden?
Check Your Credit Report and Credit Score
Many buyers enter this process without checking their finances. They calculate their affordability based on a perceived mortgage payment and then start looking for a house within their perceived budget.
But a mortgage lender will look at multiple factors to determine affordability and their outcome might be completely different to yours. To understand what they will see and judge you on, check your credit report with one of the major credit bureaus.
The former will dictate how likely you are to get a good mortgage rate, with credit scores higher than 720 being preferable. If it’s lower than this but higher than 580 you may still qualify for an FHA loan or a VA loan, but any lower and you will struggle to get any kind of favorable interest rate and may be rejected outright.
Your credit score takes several factors into consideration, each weighted different. In order of importance, they are:
- Payment History: How strong is your payment history? Have you been meeting your monthly debt obligations or do you have a lot of missed and late payments?
- Credit Utilization: How much of your available credit have you used?
- Age of Accounts: How long have you had active accounts; are most of your accounts new or old?
- New Credit: Have you recently applied for and been accepted for multiple lines of credit?
- Credit Variety: More variety is better—an account that only has one credit type (such as credit cards or loans) will suffer in this category.
Calculate your Debt-to-Income Ratio
A lender focuses on more than just your credit score. They also look at your debt-to-income ratio (DTI), which tells them how likely you are to meet your monthly mortgage payment. A DTI above 43% will make it very difficult for you to acquire a mortgage, while anything under 30% shouldn’t encounter any issues.
Your DTI compares your gross monthly income to your total monthly debt payments. If you earn $2,000 a month and spend $500 on debt payments, then your DTI is 25% as your debts are 25% of your income.
Check Your Affordability
You can also use your DTI to determine your affordability. A mortgage lender won’t allow you to secure a mortgage if the monthly payment causes this ratio to rise above an affordable amount.
Use our Mortgage Calculator to discover what you can and can’t afford and to give you an idea of what sort of house to look for.
Find a Real Estate Agent
Look for a real estate agent who can help you in your search. The internet has made it easier than ever to find a suitable real estate agent as you can check comparison sites and read reviews to ensure you’re dealing with a credible and highly rated realtor.
Getting preapproved nice and early will make life easier for you further down the line. It’s not a commitment—you don’t need to get a mortgage from them just because they have given you preapproval. It is just an official letter that confirms you can get a mortgage for the value that you’re looking for, giving you some peace of mind and providing the seller with some assurances.
It also helps with your budgeting, as you’ll understand what mortgage rates you can get and how much you’ll be expected to pay every month.
Offer and Buy
It’s important not to let your heart rule your head when placing an offer. Don’t exclaim to the seller that you love their house mere hours before you send them an official offer; don’t offer the asking price just because you can’t bear the idea of it slipping through your fingers.
Sellers understand that first-time homebuyers may be a little more eager to buy and more susceptible to counteroffers, but if you stand firm, stay calm, and negotiate hard, you’ll get what you want.
This is a commitment that will stay with you forever and one that will cost you a huge sum of money. A saving of 2% or 3% may not sound like much on paper, but if you’re dropping $200,000 on a home, that’s $6,000, and it’s $6,000 that could compound into masses of interest.
Every little helps. Work with your buyer’s agent to craft an affordable offer that can save you a lot of money.