There is a common perception that buying a house takes months. For some people, this can be true, but this is often a reflection of needing something specific or struggling to fit one's needs into one's budget. A low inventory in the area you are shopping in can also have an impact.
In fact, the typical period of time you should allow for from shopping to closing is about three months. Some people find the perfect home right away. For others there may be no need to hurry. Taking plenty of time over finding just the right home is ideal when you can do it. However, there are ways to make the process faster. For example, a really good realtor will have a strong awareness of inventory and know just where to look, helping you narrow down a short list faster.
Because so many buyers assume the shopping process will take a lot longer, many are not as ready as they might be to close. Others may not be sure what the next steps are. Once you have selected the house you will need to get final mortgage approval, a home inspection and appraisal, purchase title and homeowners insurance and arrange for closing funds. Be aware that problems with the home inspection may cause you to change your mind. It's a good idea to have a solid idea of what problems you can handle and what might be deal killers, before you even start shopping.
There are a number of factors which can cause the closing period to be delayed beyond the 50 days it takes on average. Some things that can slow it down include:
- The underwriter's review of the appraisal.
- A change in your credit score or erroneous filings on your credit report.
- New liens or judgments against you or the seller
- Marital status change for either you or the seller. Try to avoid timing things so that your marriage takes place during the closing period.
- Missing bank statements or insurance information.
- New debts incurred (new car, new credit card, etc.)
Closing is entirely dependent on the lender, and while some of them will expedite the process, they may not be able to do so. Larger banks are more likely to cause problems than small mortgage lenders, perhaps because the latter are more focused and more likely to understand how quickly you may need to move in.
The best way to avoid closing delays is to get your loan prequalified or preapproved. The two terms are often used interchangeably. Being prequalified means you already have some idea of the amount of money your lender is willing to give you. It may also mean you already know if you have credit issues, which can help avoid some of the potential problems with closing. The amount for which you have been prequalified is a reasonable budget that you can use when shopping for a home. This keeps you from wasting your time and the sellers looking at properties you have no chance of being able to afford. Also, when you are prequalified, the lender will generally move faster once the contract is signed. This can reduce the closing time significantly and help make sure you are able to move in quickly. Bear in mind that prequalification is not a guarantee you will get the loan, as problems might be discovered later. You can generally get prequalification while you are looking for the house. If you are unable to get a prequalification, or are not getting the amount you need, then you should take steps to improve your credit score or review the reasons why.
The house buying process can often be a lot faster than you think, especially if you have a good realtor or live in an area where there is good inventory. Although some people do spend months to find the right property, this is relatively rare and you should be ready to go if you find the right home. Getting your mortgage preapproved is a great way to ensure that you are ready to move, and it also means that you have a chance to talk to your lender and seek their advice.