Buying a house and qualifying for a mortgage require your full attention and a well laid plan. The sooner you take preliminary steps in the loan qualification process, the smoother your home buying journey will be. The average time to buy a house is 45 to 60 days. Today, however, mortgage lenders will scrutinize your loan application with stricter underwriting rules and may ask for additional documentation to support your credit worthiness. If you can start with the end in mind, you stand a greater chance of closing within 60 days.
Putting First Things First
Most buyers will start with the most enjoyable part of the home buying: shopping for a house. While it's important to have buying criteria and homes you can make an offer on, it may actually slow down the home buying process. Getting pre-qualified and pre-approved is an effective way to prepare for a short buying process and smooth closing. Borrowers who pre-qualify and get pre-approved shorten their closing time by at least a week. The lender can give you the most accurate picture of your ability to qualify for a loan and how much you can afford. Armed with this information, you'll be more informed and qualified as a buyer in the eyes of sellers and real estate agents representing them.
Things You Will Do
Shopping for a loan, a real estate agent to represent you if you choose and a home you can afford fall high on the priority list. Before you make an offer, however, you'll want to complete your due diligence by giving the home a second visit and having it inspected by a licensed inspector. If you have additional questions about the condition of the HVAC, electrical or plumbing, hire a licensed contractor to review these systems before you make an offer or soon after the seller accepts your offer.
Avoiding Inspection and Appraisal Delays
If you're purchasing an updated or newer home well maintained by the seller, there's a good chance only minor inspection issues will need to be addressed. Any repairs you want the seller to complete, after all, could lengthen the time you need to close. Additionally, if the neighborhood is fairly active and has had steady sales in the past six months, the appraiser will have an easier time finding suitable comparable sales to value the home and getting the appraisal back to the lender within a week. If the neighborhood has several foreclosure sales, it could also affect the appraisal value of the home and complicate the underwriting process.
Other Causes Of Closing Delays
A complication or two won't derail your closing, but several hiccups could delay it and set you back a few weeks if left unchecked. Avoid making big purchases before closing on your loan or making any big life changes such as changing careers or going back to school since the lender may pull another credit report right before closing. Also, avoid making any large deposits or withdrawals since the lender may ask you to account for them with additional documentation. If the home is in a high risk flood area, start looking for flood insurance early to get the best rate since the lender will require you to purchase it on any federally insured loan.
Alternative Home Buying Expectations
If you decide to go bargain shopping and purchase a home via a short sale or foreclosure, be prepared for a much lengthier closing process and additional requirements. A short sale will require the approval of both the seller and bank and you have no control over how long the process will take. A foreclosure or bank-owned vacant home will likely require additional negotiations with the lender, additional insurance if the house is vacant or involve evicting tenants or the current owner.
Monica Dillon has more than 10 years experience in real estate sales, marketing, investing and appraising. She specializes in energy efficiency building practices and renewable energy. Dillon has been syndicated by the National Newspaper Publisher's Association. Her work has also appeared in the "Journal Of Progressive Human Services."