HOW LONG DOES IT TAKE TO BUY A HOME?
Timing matters when buying a new home. First time buyers might be working around the timetable of their lease so they can avoid paying both rent and a mortgage for months on end. Current homeowners may be trying to juggle a home sale with a purchase so that they have the funds for the new downpayment. So how long does the home buying process take and when should buyers start seriously looking at properties?
The available inventory in your target neighborhood will be the biggest variable in how long it takes you to find your next home. When homes are selling above list price in bidding wars, starting your search early will give you the best chance to find a great property within budget (so long as you can be flexible on your closing date). If you have a very specific wish list, especially if the desired home features are uncommon in your area, you will also have a longer home search.
The prospect of paying for two homes is often what limits the flexibility of prospective buyers. The good news for renters is that mortgage payments are made in arrears. In most leases, you pay for the property at the beginning of the month, so your rent payment on November 1st is to cover the month of November. But when you pay in arrears, your payment for November would actually come due on December 1st. This means that if buyers close on October 15th, they will prepay the interest for the remaining days of October at the closing table and their first mortgage payment will be due on December 1st. Closing early in the month costs a bit more up front due to the prepaid interest for those extra days, but can give buyers almost 60 days before their first mortgage payment is due. This gives prospective buyers more flexibility with their timeline and allows them to buy a property while they still have a month or two on their lease.
Once your offer is accepted, the contract-to-close process will generally take 30 to 45 days. Your lender may be able to fund the loan sooner, but this gives you the time to remedy any potential issues that may arise with the inspection, appraisal, or underwriting. When you are creating your home buying timeline, plan for at least 30 days to close.
Understanding your local market before you start seriously considering properties will make your home search process more efficient. Physically visiting properties can be time consuming, especially if they are far from being a good fit. When you know what types of homes are available and how much they sell for, you can reset your expectations and save yourself from the disappointment of losing out on great homes. Many buyers will adjust their wish list after viewing properties and seeing what their budget will get them in their preferred neighborhood. At the beginning of your home search, it is useful to view a selection of properties that show a variety of styles, sizes, prices, and locations. This lets you compare different options and decide which features can be compromised to ensure you get your must-haves. Some buyers will start checking out home listings online four to six months before they are ready to buy, but if your timeline is compressed your real estate agent can give you a market overview with tour in a single weekend.
Start looking seriously at properties about three months before you want to close. That may seem early, but about half of that time will be in spent under contract. In a low inventory market you may want to get started even sooner, but don’t fall in love with a home before you are ready to put in an offer! The more flexible you can be with your closing date, the more options you will have to find a home that is perfect for you.