Isn’t it a thrilling experience getting the keys to your house right in your hand? However, the process of buying a house can take longer than you might anticipate. You will have to jump several financial hoops before getting that key right on your hands. Besides, you will have to go through the hassle of getting a house you can afford, and it should also match what you wished for. Saving for a down payment, putting an offer, and time to close the deal are also some of the vital factors you will need to put into account. There is no definite answer as to how long it takes to buy a house since that depends on several factors. Ideally, the process of buying your right home can take between 30-45 days before you can seal the deal. Besides, you will need to have carried out some window shopping by physically visiting such open houses or doing online searches. Many factors come in to play while buying a house which might either hasten or delay the process. Therefore, a thorough understanding of the home buying process will give you real insights into how long it will take you to buy a house.
Average to Save a Down Payment Assuming an Average Salary
In some countries like the USA, the average down payment might be way below that you can imagine. Ideally, the down payment is 5.3 percent of the purchase price on average. When buying a home, most Americans deem a 20% down payment as the norm since this allows you to get around needing to pay Private Mortgage Insurance. Nonetheless, most of the houses are bought for less than 20 percent down payment. The opportunities for paying low down payment aren’t uniform across the country. The median down payment for most homes in the United States is close to 5% rather than 20%. Therefore, there are many opportunities for homebuyers to buy homes even while having just a little money. A lower down payment attracts many home buyers since they won’t need to spend a lot of time-saving for the down payment. This means that if you have a stable job, a good credit score, and are able to consistently save towards your down payment each month you can likely move into your own home after a 12 months of dedicated effort to looking and getting your finances in order. Check out our home buying negotiating tips to save even more on what you would be paying for the house.
Time to Find a House That’s Right for You
Finally, getting that dream house can be exciting. But how do you choose the right house for you especially if it’s your first home? What will you need to look at to be certain this is the house you need and how will you maintain your new home it if you have a busy schedule? The sure way to do is grab a book and a pen and figure out how much you will need for your dream home. Otherwise, your dream house will only remain a wish if you can’t afford it. As you do your calculations, note that it is likely to cost you more than the actual price since you might need to fix some parts to suit your needs. Also consider that other facilities such as a pool will need to incur additional costs to maintain it.
Another way of deciding if a home is suitable for you is by listening to your intuition. The impression you get a few moments after entering a house is likely to be right but don’t be appear over eager or the sellers real estate agent may try to take advantage of that and rush you into a higher offer. Is it a comfortable house, or is it going to depress you over time and turn into a money pit? Trust your first reaction since it is likely to be right. While it is important to own a home over time as it allows you to build wealth and have something truly significant you can call your own, deciding on the right house for you shouldn’t happen overnight.
Time to Put in An Offer
Moving on well and you have found the house you have been yearning for, you will need to decide to bid for it. Do you make a high offer and risk wasting money? Or do you make a low offer, which means you might end up losing your dream house if you offend the sellers? How will you ensure you buy your dream house at the best price possible? During your first meeting with the house agent, it is prudent to downplay the offer price since agents tend to show you homes that are a little bit more expensive than what you want to spend. Even if you notice that is exactly the dream house you were looking for, don’t declare that to your agent since it implies you will also be ready to pay more for it and in most cases OVERPAY.
Carry out your market survey to establish how much similar properties are selling at the market and the pace at which they are selling. After deciding the amount to spend on the house you should inform your buyer agent to draft up the official offer statement. The agents will pass the offer they get to the seller. You can make the offer in writing or via email to avoid confusion or arguments later. In case the seller is interested in your offer, then the negotiations will start.
Time to Close
Before getting in negotiations and sealing the bidding process, decide how much you will want to spend and take to account any exceeding amounts. Remember, there will always be an extra cost when buying a property. Which is the best bidding tactic to use? It depends on the bidding process and whether there are open negotiations or not. If you are carrying out negotiations, always start by giving a low offer. Usually, you should give 5% lower than the asking price. The agent will inform you if other bids trump yours, and you can have a chance to present a second offer. Don’t be hasty to offer more than the asking price unless you are aware some buyers have already made such offers, and therefore you are worried about losing your dream home to them. Always maintain your calm, stay polite and realistic. Even if the seller seems desperate, you needn’t pay attention. Don’t accept to be influenced by other things thrown into the deal.
The time from deciding to look for a home to getting a pre-approval to be able to put in an offer to the negotiations and closing is the time most people think of when thinking about how long does it take to buy a home. If you are doing all of this process by yourself it could take several months to find a home and another several months to close on your loan totaling 4 to 6 months. With a team of expert real estate agents and mortgage loan officers you can expedite this process to 2-3 months. You can even sometimes get a home in several weeks if you are able to put a full cash offer on a home where you know the neighborhood really well. This is how some rare people make huge fortunes in real estate but it takes a lot of money to make the money as they always say.
Time to Pay Off Your House (15yr, 30yr Loans)
One of the best ways to pay off your 30 years’ mortgage is by ensuring you get the best possible rate at the start. The majority of home buyers will opt for 30-years terms since it is the most affordable loan in the market but cost more overtime from the interest accumulation. It works best for first-time homeowners looking for security and safety with a monthly payment that they can easily handle. What happens if you come across a source of extra income five years down after buying your home? It would be reasonable to consider paying an extra amount for your mortgage to clear it faster. How will be you able to pay the 30 years’ mortgage faster?
- Consider paying an extra amount each month.
Take all the cash you have remaining at the end of the month and use it to make the additional payment. It will help reduce the principal and interest you would have to pay at the end of the loan period. If you’re able to consistently pay 8% extra per month that equates to a total extra payment a year and this can cut town a 30 year loan to 20 years. This also saves 10s of thousands of dollars over the lifetime of the loan that would otherwise go to your bank.
- Make 55%-60% payments twice a month.
Another way of shortening your loan period is by making bi-weekly payments. You can opt to have it deducted from your salary. That will translate to a significant amount already paid at the end of the year. It is a highly recommended method by paying your mortgage. It is a great way of ensuring you don’t commit the cash elsewhere.
- Endeavor to make extra payments each year
Take back your end of year bonus or any new-found money at the end of the year back to the business. The earlier you start handling your loan that way, the easier it becomes to refinance it.
- Think of refinancing it with a shorter-term mortgage
Look for lower interest as well as shorter-term mortgages. You will get a mortgage based on the interest rate in the prevailing market. You can as well negotiate with your lender to get a 20 or 25years mortgage. Some lending organizations will allow the reduced term without altering the monthly payments than what you have been paying for in the 30 years mortgage.
Is it advisable to pay your mortgage faster? While many homeowners will want to pay for their home faster, it is advisable not always to use your extra income to pay it. If you are surfacing other loans such as student’s loan, which attract a higher interest rate, it is reasonable to pay them first. Take care of more expensive loans fast. Therefore, it is upon you to make options. Some home buyers will prefer to go for low monthly installments for the 30-years mortgages since it allows them to have some extra cash to invest elsewhere.
Bottom line
When the question of how long it takes to buy a home comes to your mind, the answer to that question isn’t precise. The best way to prepare is to buy ironing your finances as well as credit. Then secure a pre-approval and a plan to do your saving. This way, you can be sure of a quicker way out of the hustle of securing the keys to your house.