The Search
A common point of confusion for people when they are purchasing a home is how long the home buying process will actually take. Some folks think that it all comes together immediately, while others assume that if will take months before they move into their dream home. The truth is that there are a couple of different components which can either expedite the process or prolong it. Here is a quick look at a few of the stages of the homebuying process, and different factors that affect the length of the experience.
First and foremost, when you begin to look for a home, you should be prepared to allot however much time you will need to find the house of your dreams. The amount of time it takes to find your chosen home can vary for many reasons, first and foremost being that your market and the time of the year you are shopping will dictate the housing inventory. If the inventory is low, it may take you a little more time to find the house that’s just right. Finding a house with any unique features that you want may also take you a little while longer. (For example, a pool or wine cellar.) Your motivation and personal timeline will also impact how quickly the shopping process can take. On average, though, I would say buyers in my market are actively looking for a home for about 30-60 days before ratifying a contract.
Contract To Close
Once you ratify a contract on your home there’s a time period called contract-to-close. This part of the transaction can have two possible timelines, one for a cash purchase and one for a financed transaction. A purchase that is not contingent upon obtaining financing can be significantly quicker than one that has a mortgage. A reasonable timeline for a cash purchase could be as little as two weeks. Traditionally that timeline is determined by how quickly the closing attorneys can perform a title search, get the title binder together, and prepare other necessary closing documents.
A contract contingent upon obtaining financing can take approximately 30-60 days from contract to close. However, as of October 2015, there have been some new guidelines added to the loan procedure which have increased the average amount of days needed to approximately 45 days. Additionally, some loan types can require additional underwriting (such as a USDA loan) and may need as much as 60 days for processing. This stage of the transaction can be marked with frustrations as it feels as if there’s either a flurry of activity (requesting of a ton of documents) or no activity at all (or so it seems). Obtaining loan approval tends to be the longest stage so it’s always best to be on the conservative side when estimating timeline.
As you are evaluating how long the buying process will take one other important factor to consider is your first mortgage payment, which may or may not be due immediately. Your first mortgage payment is likely going to be due on the first of the proceeding month. However, if you choose, you can make your first payment be a little over a month after. For example, if you close on April 15, your loan officer can prorate the taxes and interest so that you first mortgage will not be due until June 1. This can be a useful tool to transition between a home you own or rent with the least amount of monetary inconvenience as possible.
It’s Different for Everyone
So, on average a homebuyer will spend 30-60 days shopping, 14-60 days from contract to close, and likely 14-45 days or so before your first mortgage payment is due. For some folks, the process can be extremely quick and take as little as 30 days total. For some, the shopping period alone can last months and months. A healthy expectation of how long it’ll take would be approximately three months from beginning to end. Everybody’s story is a little different but these should give you a good framework. You can find other helpful articles in our buying a home category.
