It is super important for any real estate investor to be familiar with the process of closing the sale of a property. Whether you are buying a single-family home or multifamily property, you need to understand and navigate the process of closing on that property.
Just like in sports, you always want to be on the offense during this process instead of the defense. You need to understand what to expect so you can set yourself up for success and actually get to closing. You’ll also want to know what’s reasonable in terms of a timeline.
How long does it take to buy a house?
So you’re ready to buy a house, but you aren’t sure how long this whole process is going to take. While each deal is different and can vary in a multitude of ways, for the most part, buying a house is pretty straightforward.
Assuming that you are going to be taking out a loan for the purchase of your new home, you will have to follow most, if not all, of the steps below.
If you are going to be paying cash for your home, however, it will be up to you whether to follow many of the steps.
What are the stages of buying a house?
Saving for a down payment
This will be entirely dependent on your personal financial situation. I won’t be including this as part of the end analysis on how long it takes to buy a house, but it is a very important (if not obvious) step in buying a home.
For some special types of loans, you don’t have to put any money down, and this step will take no time at all.
Most of the time, though, you should save 5%–20% of the purchase price as a down payment.
As an example, for a home that you are going to purchase for $200,000, you would need anywhere from $10,000 to $40,000 saved as a down payment.
Before you submit an offer, put all of the money that you have saved into a savings or checking account that you aren’t going to be touching until you close on a home. This will come into play later (see below, under Get Your Closing Funds Ready).
Find an agent you like (1–10 days)
This is one of the most important steps when looking for a home. You’re going to be in contact with your agent through the entire home-buying process. You are going to spend hours looking at houses together and will look to this person for advice when it comes time to put in offers and negotiate.
You must take the time to search for a qualified agent during this period. Choose one who has experience buying houses in the area you’re looking at and knows the ins and outs of the market.
You also want to find one who comes recommended by others who have bought houses with them. These don’t have to be people that you actually know, but that is helpful.
On top of that, you want to find someone who matches your personality and the goals that you have for purchasing a home. For example, if you are a very laid-back person, it might not be in your best interest to go with someone who is always at an energy level of 30 out of 10.
Get pre-approved for a loan (1–3 days)
This process is very simple and can usually be completed within 24 hours.
Whatever lender you choose is going to ask you some pretty simple qualifying questions about your financial situation. They’ll want to know how much you make, either as an individual or a household, per month. They are also going to want to know what recurring debts you have.
Debts can be other homes that you own, car payments, and even credit card bills that you owe. These aren’t the only types of debts, just the most common ones.
After a short phone call, the bank will run a credit check on you to make sure that you are a qualified individual. Don’t worry too much about this part, even if you don’t have the best credit score; as long as your income minus your debt is above the bank’s threshold, you should be able to get a loan.