{"id":220,"date":"2021-07-21T20:11:45","date_gmt":"2021-07-21T20:11:45","guid":{"rendered":"https:\/\/www.realtyhop.com\/mortgage-center\/?p=220"},"modified":"2023-07-22T13:38:14","modified_gmt":"2023-07-22T17:38:14","slug":"homebuying-process","status":"publish","type":"post","link":"https:\/\/www.realtyhop.com\/mortgage-center\/homebuying-process\/","title":{"rendered":"How Long Does It Take to Buy a House?"},"content":{"rendered":"
So, you\u2019re thinking about buying your first home. If you\u2019re like most people, you\u2019re probably discouraged with thoughts of the roof caving in after you move in. You also probably think it\u2019s just straight-up impossible since you don\u2019t have enough cash for a 20% down payment<\/a> plus all the closing costs<\/a>. We could go on and on with the potential downsides people come up with as a reason not to become a homeowner.<\/p>\n We\u2019re here to tell you that purchasing and owning a home isn\u2019t all that complicated or scary if you do it the right way. For example, did you know that most first-time homebuyers use a program that allows them to put just 3.5% down? This article will detail step-by-step everything that you need to do to get the home of your dreams, as well as how long you can expect each step to take.<\/p>\n When you think of buying a home, who do you think you should contact first? Most people would say a real estate agent. They are the ones who will be browsing through listings with you and showing you properties, right? A smart homebuyer, however, should talk to a mortgage loan officer first. Let us explain why.<\/p>\n Getting pre-approved for a mortgage is key to a smooth homebuying process. A pre-approval letter from a lender is instrumental \u2013 it shows the sellers and your real estate agent that you are serious about buying. It also gives you a better idea of how much home you can afford. Now, you might ask, \u201cwhat exactly goes into the pre-approval process?\u201d<\/p>\n There are quite a few key factors that go into whether you will be approved or not and, if you are approved, the interest rate and terms you will receive. Let\u2019s break them down.<\/p>\n Your credit history and credit score go hand in hand. Generally speaking, the higher your credit score and the longer your credit history has been clean, the better interest rate you will receive. Don\u2019t fret if your credit score isn\u2019t perfect, though; a good loan officer will be able to take a look at where your credit is lacking and help you put together a plan to get your credit up to a point where you can get a favorable interest rate.<\/p>\n If your credit score is below 660<\/a>, you might want to start the process early and clean up your credit report. Paying off debts is always a good way to raise your credit score, and you could also consider hiring a credit repair company to take care of disputes and errors on your credit report.<\/p>\n Your debt-to-income ratio<\/a>, or DTI, is also critical. Simply put, your DTI is the amount of monthly debt you have (student loan repayments, auto loan payments, credit card payments, etc.) divided by your total monthly income. As a general rule of thumb, your debt-to-income ratio should be 36% or lower. In other words, if you make $6,000 per month, your monthly debt should not exceed $2,160 in total.<\/p>\n Lenders also like to see that you have stable employment and have been with the same employer for a while. Most prefer that you have had a steady source of income for at least two years. It\u2019s acceptable if you are self-employed, but you will need to be able to provide two years of proof of income, as well as a few additional documents, which we will touch upon shortly.<\/p>\n They will also take a look at your assets and liabilities. Most lenders like to see that you have at least six months of cash reserves in a checking account or other types of liquid funds so that you will not stop making your payments if you lose your source of income. In general, the more assets and less liabilities, the better.<\/p>\n Finally, the lender will need you to provide relevant documents. Here is a short list of items that most lenders will ask for:<\/p>\n Once you\u2019ve assembled all of that information and gotten pre-approved, you can start looking for a real estate agent<\/a> with extensive market insights and knowledge in the areas you\u2019re interested in. A good realtor can help you navigate the homebuying process as well as the contract negotiations.<\/p>\n Now that you are pre-approved, you can start your home search. Take some time to browse through listings on sites like RealtyHop<\/a> and go over what you want in your new home with your real estate agent. It might take a long time for you to find a property you like, depending on how strict your criteria are. Don\u2019t get frustrated if you don\u2019t find something you like after a couple of weeks. The timing is ultimately determined by available inventory in the areas you\u2019re interested in and your preferences.<\/p>\n Keep in mind, however, that most pre-approval offers last for 60-90 days. Suppose your mortgage pre-approval expires before you enter a contract. In that case, you can apply to be pre-approved again, but know that it might ding your credit score, as the lender will likely run another credit check, which is considered a hard inquiry on your credit report. Treat it as an opportunity to shop around and look for more favorable rates and terms.<\/p>\n Now that you\u2019ve found your dream home, you can put together an offer. While this step only takes a few days, it\u2019s often the most nerve-racking part of the homebuying process. Your agent will advise you on the price to offer, based on comparable sales and properties in the same area. Once you\u2019ve decided on the price and terms with your real estate agent, your agent will draft submit the offer letter on your behalf. If you don\u2019t have a real estate agent or prefer to submit the offer yourself, make sure your offer letter includes:<\/p>\n Three things may happen after you submit the offer: (1) the seller accepts it, (2) the seller makes a counteroffer, and (3) the seller rejects your offer. Most likely, if your offer is within the reasonable price range, the seller\u2019s agent will come back with a counteroffer.<\/p>\n If the seller accepts your offer, you will go into contract. You will also need to make an earnest money deposit, which is the amount of money you put down in good faith to show the seller that you are serious about this purchase.<\/p>\n Whether or not you need a real estate attorney depends on the location of the property. Having a real estate attorney by your side can be extremely helpful, as they are experts in negotiating and determining what should be included in a real estate agreement.<\/p>\n Now we want to make sure that what you saw with the property when you went on your showing is what you\u2019re going to get. Depending on your state, an inspection<\/a> typically occurs within ten days after the real estate contract is executed.<\/p>\n Assuming a standard period of 10 days, you would get a professional home inspector out to inspect the property within the first few days. Your real estate agent should be able to refer you to a good inspector in your area.<\/p>\n The inspector will give a detailed look at all areas of the home, especially ones that require a professional eye (foundation, roof, plumbing, electrical, etc.). A detailed written report would usually be ready within a day or two after the visit, documenting everything they found during the inspection. If the inspection comes back clean, you can proceed with the deal normally. If, unfortunately, there are any underlying issues, you can either ask for the seller to repair them, ask for a concession or walk away from the deal.<\/p>\n
<\/p>\n1. Get pre-approved for a mortgage (1-3 days)<\/h2>\n
Getting Pre-Approved<\/h3>\n
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Credit History & Credit Score<\/strong><\/h4>\n
Debt-to-Income (DTI) Ratio<\/strong><\/h4>\n
Stable Income & Employment History<\/strong><\/h4>\n
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2. Find a home (1 week – 3 months)<\/h2>\n
3. Make an offer (1-3 days)<\/h2>\n
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<\/p>\n4. Inspection (3-10 days)<\/h2>\n
5. Mortgage application (1-3 days)<\/h2>\n