How Long Does It Take to Buy a House?
How long does it take to buy a house? It will take much longer if you make mistakes at the beginning of the home buying process.
Even if you buy a home quickly, if you fail to consider the range of possibilities where excess expenses are made, you may lose money in the process. These common mistakes are made by home buyers internationally.
The key is to know what to look for, and be prepared to do some additional research. These are the five mistakes you should avoid before you buy a house – and what you should do instead.
1. Interviewing One Agent – How Long Does It Take to Buy a House?
An agent can be a great asset during your search for the right home. They can look at your requirements and financial situation, and help you set realistic expectations. They can help you narrow your search criteria when you’re feeling overwhelmed. They will be by your side to guide you through the home-buying process when you finally find the perfect house. Best of all, there is no upfront cost – the agent receives commissions paid by the seller. However, you shouldn’t stick with the first agent you come across. You should interview at least three agents before you choose one. Key questions to ask these agents include:
- How long have you been in the business?
- Are you a full-time real estate agent?
- Which neighborhoods or areas do you specialize in?
2. Not Knowing Your Financing Options – How Long Does It Take to Buy a House?
One of the worst things you can do during your home search is making assumptions. Don’t assume you will get plenty of financing to cover a large, luxurious home that’s beyond your reach, but also don’t assume that you won’t get any financing at all. Once you have an agent, you should research mortgage lenders and speak to them about your options.
A pre-approval letter, which is a written commitment from a lender for a specific loan amount, will be very useful. But make sure you choose the right lender. Different lenders may offer different interest rates and terms on loans.
Meet with at least three lenders and get a Loan Estimate from each one, which will outline the amount, rates, and terms of the loan.
3. Making an Offer That’s Too Low – How Long Does It Take to Buy a House?
In a seller’s market, there are more buyers than homes to accommodate them. This results in higher prices and multiple buyers competing for homes, known as a bidding war. This type of market will require you to pay full price for a home, or even higher. However, if you feel you cannot compete with other buyers financially, you can still improve your chances by making a clean offer.
A clean offer means you don’t need contingencies to make it to closing – meaning you have a pre-approval from a lender and won’t have any problems when it comes time to make the actual purchase. You can also write a personal letter to the owner describing why you love the house to appeal to their own emotional attachments to their former home.
4. Not Setting Aside Enough Money for Closing Costs – How Long Does It Take to Buy a House?
Remember that you are responsible for more than just the price of the purchase. There are also closing costs, which can add a substantial amount to the final price. Three days before settlement, your chosen lender will provide you with a closing disclosure (CD), which tells you the finalized terms and closing costs for your loan.
The seller will pay some of the closing costs, but not as much as you will need to. Typically, you are responsible for two to four percent of the purchase price. This adds thousands of dollars to the final price. It is possible to get an estimate of closing costs before the finalized closing disclosure is provided.
Your lender may be able to provide a rough estimate once the seller accepts your offer, which will give you about four to six weeks to prepare.
5. Taking on New Debt – How Long Does It Take to Buy a House?
When you’re under contract on a home, it’s a bad idea to apply for personal loans or make large purchases on a credit card. This will reduce your ability to repay the mortgage loan once those monthly payments start. It could also jeopardize the loan long before that, since your lender will re-evaluate your credit right before closing.
They want to make sure that you can still afford to repay the loan. If they see new debt, they may reject your application or at least raise your interest rate significantly, making the loan more expensive.
This is why budgeting before you begin the search for a new home is very important. If a large expense comes up, you’ll need to wait until the sale on the home is final and you have signed the paperwork before you apply for new loans or make credit card purchases.
So depending on how prepared you are and having all the papers in place needed will determine how long of a process it will take on buying a house.
Tips for Avoiding These Mistakes When You Buy a House
The above mistakes are common among home-buyers and can cost you the home you want or at least raise its price. You can turn them around by trying these tips instead:
- Don’t search alone. Use an agent who will help you navigate the housing market.
- Interview at least three agents and ask each of them how long they have been in real estate, whether they work as an agent full-time, and which areas they specialize in.
- Research mortgage lenders to get the best interest rates. Narrow the list down to at least three lenders.
- Meet with the three lenders you have chosen and obtain a Loan Estimate from each one.
- Choose the best lender and discuss your options with them.
- Obtain a pre-approval letter from your lender.
- Determine whether you are in a seller’s or buyer’s market.
- Be prepared to pay full or above market price for a home in a seller’s market.
- Make a clean offer without any conditions or special terms.
- Write a personal letter to the homeowner.
- Get a rough estimate of closing costs from your lender when the seller accepts your offer on a home and budget for these costs accordingly.
- Keep from taking on new debt until after you have signed paperwork and are holding the keys to your new home in your hand.
These tips will ensure that your housing search turns into a trip to move into your perfect home.