Just how long the whole production will truly take from pre-approval to closing is on the minds of every prospective home buyer. Perhaps you were looking to get into one of the 811,000 homes sold in 2021 and are just now circling back to homeownership.
There are stages to home buying, including:
- Pre-approval when you will be outlining a budget and getting ready for your purchase
- Saving a down payment and closing costs to help make the process easier
- Finding your credit score and reviewing your credit report.
- Ensuring you are not taking on new debt
- Searching for a realtor & a home
Your home buying experience could take eight weeks in an exceptionally streamlined process, or it may take a more typical 5 to 6 months to go from pre-approval to closing. There is more to consider that we will dive into below, so read on to find out the factors that sketch your timeline for buying a home.
Pre-approval
You get to do some critical research in the pre-approval stages of home buying. Before you start shopping for a home, you will need to verify your creditworthiness with your lender. Additionally, your income, debt-to-income ratio, credit rating will add to how much home you can afford.
You may be like most people during this period and save for a down payment and closing costs. The average period for that savings is six months, and a down payment is a tremendous factor in purchasing a home. You will also want to explore your budget to know how much money, precisely, is coming in and going out. In addition, home buying could mean a change in jobs or cities, which are both factors to assess regarding the timeline for closing on a home.
In the pre-approval stage, you should collect documents that will only take a day. However, if it requires some digging, it could take a week. Gathering your financial documents leads you to the process of speaking with a mortgage lender or a broker. They will supply a pre-approval letter to ensure you can afford the house you want.
Reviewing all loan options is also vital for the process. You can even pre-qualify via an application and document submittals. Once you have obtained a pre-approval letter, then the house hunt begins!
The House Hunt!
The process of finding the home you are looking for can take anywhere from 15 days to 3 months, depending on the market and your real estate agent. Yes, it would be best to work with a realtor who will advocate on your behalf in your home buying deal. Going through this process with a realtor can help you determine how you will prepare an offer. Your real estate agent will help with the writing portion, and they will be there to help you get the best deals.
Working with a realtor, you should come up with a needs list. This list will help find the price you will pay for a home, from minimums to maximums. Outlining a monthly budget and recognizing taxes is all a part of this process with your realtor, along with non-negotiables. Having this together will help you make the most of your search and speed up the process.
Going to showings with your agent should not be a lengthy process once you have your list together. You can find out so much of a home before you set foot on the property that you may narrow down your showing to five in total. Rely on your list at this stage and save time by looking for significant issues. Things like plumbing and electrical problems, the presence of carbon monoxide, lead paint, and radon, along with defective gutters, should be red flags. Spot them early to stave off enormous repair costs.
Remember to be patient and prepare the terms of an offer you are willing to make. Once you have made an offer that has been accepted, you begin to negotiate and go into contract.
Underwriting & Closing Preparation
The underwriting process is when you submit all of your documents to ensure your loan goes through. Underwriting can take 15-20 days on average, and it happens concurrently with the appraisal and inspection processes. The underwriter must review the appraisal to approve the loan. (If you are buying in cash, you will not need an appraiser.) Fortunately for the buyer, much underwriting takes place behind the scenes. Therefore, if you have provided all the correct documentation, you will not need to be a part of the underwriting. But keep in mind that loan processing occurs during same time as the underwriting process and can require the borrower to be available to send extra documentation. So, don’t go anywhere without a good WiFi signal during this time!
An inspection and post-inspection take around 10-15 days from when the contract is accepted. You can negotiate a post-inspection with your realtor where you get to list off what is critical for you, what needs to be fixed, and who is paying for it.
The contract and closing stage can take anywhere from 30-45 days, up to 2 months on the high end. Once you are under contract, this is a phase where not many changes will happen. In the under-contract period, you should hire an independent inspector to let you know of any defects and deficiencies with the property to understand what needs to be fixed.
Closing
Once your underwriting has concluded and your appraisal clears, your lender will supply a closing disclosure outlining the terms of your loan. Closing costs and your APR will be a part of this document, so you should read over it attentively as you must be given three days to read it. From there, you will supply your acknowledgment of the disclosure and schedule your closing meeting. Once the loan papers are signed, down payment is submitted, and the ink is dry, you will take control of your new home.
Most buyers can expect around six months for their buying experience. The least amount of stress and the highest chance of success begin with preparedness. How long the process takes will depend on the buyer and their level of preparation. Getting everything in line and ready for your pre-approval then having a deliberate search process can make the whole production smoother. Partner with your realtor and put together a strategy to make success a planned event in your home buying experience.
