The Timeline For Buying A House
TL;DR - Expect the home-buying process to take 50 days or longer.
So, you’re interested in investing in real estate. You’ve been thinking about getting in the game for a while now and are ready to take the plunge. Or maybe you’re an experienced investor and just want a refresher. Regardless, it’s important to know all the steps required before you get the keys in your hands. Let’s arm ourselves with knowledge, shall we?
The timeline for buying a house
Hold Your Horses
You didn’t think this process would be easy, did you? Well - good news. It actually is.
According to Ellie Mae, a mortgage data firm, it took 51 days on average to close a loan on a home purchase.
But, there are some important steps you should take in advance. To prepare yourself for situations that could have been preventable.
Start Saving (6-12 months before beginning the buying process)
A big mistake would be not saving for a down payment.
Saving means spending less than your earn - a reasonable goal would be to save 50% of everything you earn. If you adopt this habit, you’ll be able to invest in no time!
Unless you’re paying with cash, in full, you’ll need to submit a down payment on your new property.
Typically, the down payment can be anywhere from 5-20% of the home price. So it’s prudent to stack up some money to prepare for that.
It’s especially beneficial to deposit the down payment money in a separate bank account.
This will ensure you don’t touch it. Just put the money in and forget about it. You’ll be happy you did.
Don’t Do Anything Crazy (3-6 months before)
Humans are ever-evolving. We love to change the things we do, which keeps life interesting and joyful.
Well, before you buy a home, just relax. Do what you’re used to doing. Why, you may ask?
Because if you make a major change in your life before buying real estate, you may find yourself out of luck.
When applying for a loan, lenders look at your debt-to-income (DTI) ratio to see if you can handle the purchase of a home.
If you’ve recently bought a new car, changed jobs, or bankrupted a new business, chances are they will deny you.
So, keep everything on the straight-and-narrow for a bit, yeah?
Do Some Research (1-2 months before)
This is a good period to begin discovering information and resources that will help you buy a home (you’ve made a great start by reading this article).
Look into what documents you’ll need to be pre-approved for a loan.
Figure out what states, cities, and areas that you want to purchase real estate in.
Set your budget for your new property.
Search up real estate agents in your area (something we’ll touch on in a bit).
One of the best things you could do is pick a market and don’t overthink it. At Undoor, we’re a huge fan of linear markets (which you can find mainly in the Midwest).
Do as much research as you can to prepare yourself for this home-buying process. Especially if this is your first time doing it.
The Stages Of Buying A Home
Okay, now you’re really prepared to buy a home.
You’ve saved up for a down payment, settled into your daily groove, and done diligent research.
Now it’s time to begin the home-buying process.
Find A Real Estate Agent (1-10 days)
This is one of the most critical steps in buying a new piece of real estate.
Finding an agent that matches your personality could mean the difference between finding your dream home or settling.
Make sure they’re investor-friendly. After all, we’re trying to make money here. A great resource is BiggerPockets.com.
If you can ask people you trust for a referral, all the better.
Get Pre-Approved For A Loan (1-7 business days)
This is the step that will prove how serious you are about buying a new house.
When you get pre-approved for a loan, it’ll show any house seller that you’re prepared and ready to move forward immediately.
Who wouldn’t love that?
If you need help finding a lender, don’t hesitate to contact us at Undoor.com. We have plenty of reputable, established lenders in our network.
Shop Around / Look For A Home (varies considerably)
As much as I’d love to tell you that you’ll find your dream home ASAP, I can’t. You might, or it might take months of searching.
This step all depends on the market of the area you’re buying in.
Offer, Negotiate, and Sign A Contract (1-10 days)
You’ve found it. The home of your dreams - and all it took was 2 years! Just kidding (hopefully).
During this phase, you’ll work with your real estate agent to figure out everything about the deal. Price, terms, and whatnot.
This will involve some offering and counteroffering on your part.
We could go on and on about our numerous negotiation strategies that have proven successful results. But, we’ll be covering those in future articles. For now, you can reach us at Undoor.com if you’re interested in learning more.
Finalize Your Mortgage Loan (2-21 days)
You’ve already been pre-approved for a loan, but that doesn’t mean you’ll actually get that loan. Weird, I know.
The lender will do a deeper dive into your finances, making sure that you have the means to buy the home.
You’ll also need to get some extra work done, like an appraisal, inspection, some insurance, things of that sort.
Process The Title (3-5 days)
Your title company will do this part for you.
Essentially, they’ll make sure that no other people have a claim to your new house. That you’re the owner of it, point blank period.
Get An Appraisal (1-10 days)
As mentioned previously, this is a step to finalize your mortgage loan.
The lender will want to make sure that they’re giving you the proper amount of money that the house is worth.
If the house is appraised below what the loan was initially for, you’ll have to get a new loan.
Once you get the appraisal scheduled, it’ll likely only take 1-2 hours.
Get An Inspection (3-10 days)
Make sure you do this.
If not, there could be some serious damage to the home that you don’t know about.
You don’t want to pay out-of-pocket for something that you could have discovered beforehand.
Whoever inspects the house will find every little detail that’s wrong with the home. You can use this to negotiate the price down, get the seller to do repairs, or add perks to your deal.
The inspection itself should take 2-3 hours.
Purchase Homeowners Insurance (2-14 days)
To get a mortgage loan, you’ll absolutely need to have homeowners insurance.
Your lender could send out a representative to make sure there are no liabilities anywhere in the house. They might require you to get certain coverages.
Luckily, you can get this insurance wrapped into your mortgage. No need for extra bills.
Prepare Closing Funds (1-3 days)
You’re almost done! Your dream home is nearly yours and you can feel the keys in your hands.
Hopefully, you took my advice and stashed your down payment money in a single, separate, bank account.
All that you need to do now is transfer the money into the proper account or make out a check. Consult your real estate agent for this step (watch out for scammers).
Final Walkthrough and Closing (1-5 hours)
Whew! You did it!
Now that you’ve done all the hard work, you can relax.
If the seller has done repairs to the house, you can do a walkthrough and check them out. Make sure they’re done right!
After you’ve approved of any repairs (or if there were none to be done), it’s time to close on your new house.
You’ll be doing a lot of signing. A LOT.
But, don’t worry. Once those keys are in your hand, it’ll be all worth it.
The Best Part?
You don’t have to be local to the area you want to invest in.
It can seem like it when reading about these steps, but that isn’t the case at all.
There’s enough technology and know-how today that you can invest in real estate remotely.
So, How Long Does It Take To Buy A Home?
It depends. A lame answer, I know.
There are so many different aspects that factor into closing on a home, so it’s hard to say with 100% accuracy.
In general, though, expect to close on a new house in 50 days.
How We Can Help You
Does investing in real estate sound intriguing to you? Would you like to learn more? We’d love to be of value!
At Undoor, we pride ourselves on teaching new and experienced investors how to maximize their gains with minimal stress. Our goal is to help you fall in love with real estate and real estate investing. What we’re most passionate about is maximizing investment gains for people like you.
Do you want to get key insights and advice that’ll help you get ahead of the game? Don’t hesitate to contact us for any and all real estate wants or needs.
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