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March
19

First Time Homebuyers Squeezed Out of the Market

As home prices soar, housing affordability is sinking to the lowest levels since 2008 and first-time buyers - who haven't benefited from rising home values and are also coping with rising rents - are being squeezed out.

First-time buyers accounted for 27% of existing home sales in January, according to the National Association of Realtors, near 2014 levels. With mortgage rates above 4%, around the highest in about three years, and expected to rise further, buyers on tight budgets may struggle even more to find homes they can afford.

  • Reuters, March 13, 2022
June
27

How Long Does It Take to Buy a House?

How long does it take to buy a house? A lot depends on how much time you spend shopping for one. But once you have a contract, it takes an average of 50 days to close on a house.

There are a lot of steps to buying a house, and any of them could drag out the timeline, especially if you're not prepared. Here's the home-buying timeline, broken down step-by-step, so you can be in control:

1. Do Your Homework

Time: 1-14 days

Dreaming about owning your own home is one thing; making it happen is another. To get beyond the dream stage, you need to do some critical research to help you figure out what you  — along with how much can you afford. 

It's mighty disappointing to fall in love with a house only to find out you can't afford it. A quick chat with your bank can help you avoid that heartbreak — it's called pre-qualifying. But it's no guarantee you'll get a mortgage (that comes later), only an indication of how much you can afford.

2. Find An Agent

Time: 1-7 days

Finding an agent who suits you is key to the home buying process. They should be your most trusted adviser. Look for one with intimate knowledge of your desired community. If they know the inside scoop, they'll know a great deal (or a bum one) when they see it.

3. Get Pre-Approved for a Loan

Time: 5-8 business days

Getting pre-approved for a loan signals you're a serious buyer. Most agents recommend you have a pre-approval in hand before you make an offer, and they can offer recommendations for lenders. But pre-approval goes deeper than pre-qualification. It needs a ton of documents from you. A couple of tips to help make this a speedier process:

  • Get all your documents for mortgage pre-approval organized and ready to go.
  • Compare rates from lenders within a 14-day window: Credit bureaus will count all their checks as just one. (That's good news for your credit score.)

4. Shop

Time: A few days to a few months

Here's where things really vary. There are so many variables. If you're set on a particular neighborhood where the inventory is low, it could take longer… or you could discover "the one" on day one. It all depends on what you're seeking and what's available. But the typical buyer actively searches for 10 to 12 weeks and looks at a median of 10 homes.

5. Make an Offer, Negotiate, and Sign a Contract

Time: 1-7 days

Work with your agent on price, contingencies, and other terms of the deal. A couple of tips to help make this step proceed smoothly:

  • Include the pre-approval letter from your lender in the offer, and put down earnest money. (Commit 3% to 4% of the sale price instead of the standard 1% to 3%, and you might really put a fire under them.)
  • If you receive a counteroffer, respond ASAP. You don't want to give another buyer time to jump in with a better offer.

Related: Tips for Making an Offer on a House

6. Get Final Mortgage Approval

Time: A few days to 3 weeks

Getting pre-approved for a mortgage doesn't automatically mean you get a loan on the home you have under contract. The lender has a few other requirements once the home is chosen, such as an inspection and appraisal. And they'll want to see even more current copies of your financial documents.

From this point on, the steps to buying a house will often overlap, so you'll have several wheels in motion.

Related: "I Need 20% Down" and Other Myths About Mortgages

7. Get a Home Inspection

Time: 3-7 days to schedule; 2-3 hours to inspect

As soon as your contract is accepted, contact an inspector to get on their books. The inspection itself will only take two or three hours, but unfortunately, they're not quite Amazon. They seldom show up the next day.

However, they can get the report to you quickly. Many inspectors take pictures and fill out the report as they go, then send it to your inbox within hours of completion. But it can take up to a couple of days if they're backed up.

If the inspection turns up issues, it can cause some delays. This can range from a day or two to renegotiate, or longer if, for example, you have an FHA loan that requires certain safety standards. A home with peeling lead paint may need to be repainted, which can take weeks.

Related: A Home Inspection Checklist for Buyers

8. Get a Home Appraisal

Time: Up to 5 days to schedule; a few hours to do the appraisal; up to 5 business days to get the report to the lender

The appraisal is key to getting a mortgage. If the home fails to appraise for the mortgage amount, you may have to put more down or renegotiate the contract. That's why you want to line up an appraiser as soon as you have a house under contract. And unlike the home inspection, this report goes to the lender instead of you and takes longer because the appraiser has to do additional research on what homes are selling for in the area.

9. Get Title Insurance

Time: 1-3 business days for title check; 2 weeks for insurance policy

Your title company will perform the check, which means they'll look at deeds and other documents to make sure you will own the home free and clear of any liens or former claims to the property.

10. Get Homeowners Insurance

Time: Up to 2 weeks

Your insurance company may send someone out to assess the property for potential risks, which can take several days. And your mortgage lender may require other types of coverage, such as flood insurance.

11. Arrange for Closing Funds

Time: A few minutes to a few days

Find out from your agent whether you need to bring a cashier's or certified check or transfer funds digitally. Transfer the funds to the right account, and get your money ready to release.

12. Conduct a Final Walk-Through

Time: 1 hour, the day of or day before closing

This is your chance to make sure the sellers made any agreed-upon repairs and left the property in as good (or better!) condition than the last time you saw it.

13. Close on the House

Time: 50 days on average; 1-2 hours to actually sign the paperwork

Each step after you've got a contract on a home is part of the closing process. And that process —  which includes getting the loan, inspection, appraisal, title, insurance, etc. —  takes the average home buyer about six weeks. 

When it's time for the main event, bring your photo ID, and stretch your hand muscles; you've got a lot of signing to do! But getting the keys? Takes hardly any time at all.

-Houselogic - June 2020

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