Provided By: Realtor.com
Consumers considering a home purchase often want to get a
handle on how long the process takes.80411222
The problem is that it’s a surprisingly subjective and
multilayered question. Answers tend to focus on the typical time it takes to
close a home loan once you’re under contract, which is usually 30 to 45 days.
That’s an accurate response, but it’s a vantage point that
leaves little room between the starting and finish lines. The home-buying
journey— from financial preparation and finding the right home to getting under
contract and through closing—tends to take a lot longer.
The reality is there is no stock answer, mostly because
everyone’s journey is different. Here is a closer look at some stages and steps
that can shape your home-buying timeline.
Building Credit & Savings
Signing a purchase agreement to buy a home is a key step,
but it doesn’t mean much if you don’t have the credit and assets necessary to
secure a mortgage.
You might need to spend time burnishing your credit profile
or stockpiling savings in order to qualify for a home loan. Credit-score and
down payment requirements can vary depending on the lender and the loan type.
(Checking your credit scores before you begin your home search can help you
determine if you need more time to build your credit. There are various
services that allow you to check your credit scores for free, including
Credit.com.)
Borrowers looking at a $300,000 home would need at least
$15,000 in cash for a minimum down payment on conventional financing (5%) and
at least $10,500 for FHA financing (3.5%).
The average conventional borrower in April had a 755 credit
score, while the average FHA borrower had a score of 685, according to mortgage
software company Ellie Mae.
Paying down debt, correcting mistakes on your credit report
and other steps can help boost your score, rapidly in some cases. But some
blemishes can take longer to clear up than others.
How long it takes to build that down payment nest egg
depends on the borrower and their budget. Scraping together enough cash to
simply meet those minimum requirements can take considerable time, especially
for first-time buyers.
Finding the Right Home
Last year, homebuyers typically looked at 10 homes over 12
weeks before getting under contract, according to the National Association of
Realtors.
But there’s no game clock on your home search. You can tour
50 homes over 50 weeks. You can buy the first showing.
It’s obviously the most personal part of the process, but
it’s also a time when perfect can truly be the enemy of good. First-time buyers
especially have to learn to balance wants and needs with the realities of their
housing market and what they can afford.
That’s not always an easy—or quick—lesson to learn.
Loan Processing
For mortgage lenders, the home-buying clock starts once they
get a copy of your purchase agreement. From there, work starts on getting the
property appraised and all of your financial documentation in order for an
underwriter to review.
Like credit and underwriting requirements, appraisal time
frames can vary depending on the loan type. For example, most appraisals on VA
loans are back within 10 days, but it might take longer in more remote parts of
the country.
That 30- to 45-day window from contract to close is a good
ballpark for most purchase loans, unless you are trying to buy a short sale
(think more like 90 to 120 days). But understand it’s not uncommon for
underwriters to require additional documents once they begin scrutinizing your
loan file.
Borrowers can help speed the process along by returning
those documents as quickly as possible. You don’t have a ton of control once
you are under contract on a home, but this is one key area where your swift
action—or lack of it—can have a big impact on your home-buying timeline.
