Thinking about buying a house? If you feel like you are ready to jump into the next phase of your life and buy a home, there are some steps you’ll need to take whether it’s your first time or not. Buying a home is an important financial and life decision. So it’s critical, especially if you are a first-time homebuyer, that you understand what the process entails and what you need to do so that you are prepared to purchase a home.
NOTE: if you are relocating to Florida or buying a second home here, then you might also want to check out our other related post that specifically answers some of your top questions about buying a home in Florida.
In this post, we’ve outlined all the steps that you should take if you are planning a buy a house so that you can be fully understand the process and be prepared and be able to secure the property you want!
How Long Does it Take to Buy a House?
When it comes to the timeline for buying a house, there are really three main parts:
- Purchase Planning & Preparation (up to a year or more)
- Searching & Touring Properties (varies – could be up to a year or even just a month or two)
- Offer Submission, Acceptance & Closing (usually 30 – 45 days)
What tends to take the most time for people is the first part, doing the research and the preparation. The latter part, actually putting in offers and closing on a home, can actually go pretty fast if you are ready.
We will go through all these steps more in-depth further during the rest of this post.
Home Buying Process Timeline: Purchase Planning & Preparation
The time it takes for you to plan, prepare and save for a home will vary from person to person. In general, most people likely start planning for a home purchase up to a year or more in advance. The main factors that can affect this timeframe are your credit, how much money you have saved, and of course how urgent your need is to buy a house.
If you have great credit and have plenty of money already saved up, then you could be ready to start looking at homes right away. However, if you need to save up money or work on rebuilding your credit score, then it might take you a year or even longer.
Regardless, you can see there are a few factors that can affect how long this part of the home buying process takes, and it really is dependent upon each individual situation. In general though, we would say somewhere around a year (more or less) is something you can plan on.
1. Check Your Credit (If You Need a Mortgage)
While your actual credit score could vary depending on the model of the credit score, in general, those who have a credit score between 580 to 669 are considered satisfactory or fair; 670 to 739 are considered good; 740 to 799 are considered extremely good while 800 and above are considered as having an excellent credit score.
The better your credit score the better chance you have at getting approved for a mortgage with a favorable interest rate.
Things that you can do to improve or maintain your credit score are by paying your bills early or on time, get rid of your debts as soon as you can, ensure that your credit card balance is lower than the limit, and checking your credit reports periodically. If you don’t have a great credit score, then you may need to take some time to improve your credit so that you can get a better rate and improve your chances of getting a mortgage.
2. Get Out of Debt!
For the most part, debt is a critical threat to your overall financial stability. Debt limits your ability to make the most out of your hard-earned money, because you may not qualify for a home loan if you have too much debt. Plus, it might be difficult to pay for your home and all the expenses that come with your home if your are paying a lot of money towards debt.
Just imagine how much money that you could save towards your retirement or children’s education, or even a home if you can get rid of your debt.
Having a lot of debt is really going to impact your ability save up money to buy a house. One strategy to get rid of your debt is by paying off your debts that have the highest interest rate first. The reason for this is that this type of debt is the most expensive and is the one that is responsible for taking your money away from you, and the most logical thing to do is to pay off the most expensive ones first before you move on to the other.
Another option is the “snowball” method, where you just tackle the smallest debt first by paying as much toward it as you can. Then after you pay it off completely, you can apply all that money toward the next lowest debt until you are paid off. Once you are paid off, then you can take all that money and start saving it up for your next home!
3. Understand Your DTI (Debt-to-Income) Ratio
DTI or debt-to-income ratio is the total amount of money you owe on debts monthly divided by your monthly gross income (income before taxes). This DTI ratio is used by lenders to determine your overall borrowing risk. The lower your DTI ratio means that the easier it is for you to secure attractive loans from lenders. Generally speaking, 43% DTI is about the highest any lender will go and still qualify you for a mortgage.
However, keep in mind that many lenders will typically look for those that have a DTI ratio of 36% and below. A low DTI ratio is important to lenders because it indicates that the borrower has proven their ability to handle their monthly debts effectively and has enough income to handle additional mortgage debt.
Once you understand this ratio and have calculated your DTI, then you should be able to see at a glance whether or not you would even be able to qualify for a mortgage on a home. And you don’t, then you will be able to see right away if you need to make improvements to your financial situation and you will have a goal to shoot for!
4. Start Saving Money for the Down Payment
Once you know if you are able to qualify for a mortgage to buy a house, then you should really double-down on your savings. It’s important to save as much money as you can to cover both the down payment on a home, as well as additional moving and move-in expenses. You will also want to make sure you have plenty of money left over after all these expenses in case there are any emergencies that come up!
At the end of the day, there are two ways to save money. One – to earn more money…which is not always possible. Two – to cut expenses.
For many of us, one of the easiest things we can do to start saving money is by cutting down on monthly expenses. You could stop going to the gym, cut your cable service, skip eating out at restaurants, eliminate a Starbucks or other unnecessary spending on sweets and treats. You could also switch to generic brands of groceries, make grocery shopping lists and stick to them, and basically eliminate all other non-essential shopping.
If you do want to earn more money, some ways you could do that include picking up a part-time job or even just doing some side “gig” work, such as driving for Uber, food delivery service, or just helping people around their homes doing yard work, cleaning, etc. You might even be able to sell some things you don’t need or offer some type of service from friends and family.
How Much Money Do You Need to Buy a House?
Typically, conventional mortgages require you to put a down payment of 20% of the purchase price of the home. This money is due at closing. So for a $200,000 home, you should expect to put $40,000 down. There are some programs where you can put down less money for a home, which we will talk about in the next section.
Your down payment reduces the amount of the loan you are taking out, which in turn will reduce your loan expenses because you will pay less interest over time as well. While 20% is the standard for a conventional loan, some people opt to put even more money down because they want to take out a smaller loan and have lesser payments. It’s totally up to you!
How Much are Closing Costs?
You are also going to need money to cover your closing costs. Closing costs are in addition to your down payment, and these costs can range anywhere from 2% to 5% of the loan or home price. Closing costs include fees paid to your lender, and they may also include title company fees, etc. So this means that on a $200,000 home, you should estimate needing another $4000 – $10,000 in closing costs.
Depending on your market, you might be able to ask as a part of your offer to buy the home if the seller will pay the closing costs. It’s not always possible, but if the seller agrees to it then it can really save you a lot of money during the transaction.
In the end, we highly recommend that you save plenty of money to cover your down payment, closing costs, as well as extra money for things such as inspections, etc. There are a number of costs that can come up with buying a home, and these are all in addition to your moving expenses. Plus, you will also want to have money saved up for any other emergencies that may come up, even after you buy the home.
5. Consider Down Payment Assistance Programs
There are a number of down payment assistance programs out there that are designed to lessen the financial burden of buying a home, as long as you qualify. Each of these programs have their own set of eligibility requirements and offer different amounts for down payments. One of the most popular programs here in the States are for first time home buyers, called FHA loans.
FHA loans are completely insured by the Federal Housing Administration and help first-time homebuyers with a minimum credit score of 580 to buy a home with only a 3.5% down payment. This is really helpful for those who are trying to save up to buy their first home. It means that on a $200,000 home the down payment would only need to be $7,000 instead of $40,000 (as required with the conventional loan with 20% down). Those with a credit score of 500 to 579 are also eligible to get an FHA loan with at least a 10% down payment.
Listed below are a couple other options for down payment assistance available to those who qualify.
- USDA Loans – Guaranteed by the US Department of Agriculture
- VA Loans – Guaranteed by the Department of Veteran Affairs
6. Decide on a Budget
Once you understand your credit, your financial situation and know the amount of money you will have for a down payment, you can set your budget. To achieve this, we recommend that you use an online calculator such as the home affordability calculator made by NerdWallet. This calculator may help you with customizing the monthly payment of your house based on your income, down payment, location, credit score, and debts.
Using these types of online calculators are great and can really help you to see how much house you can actually afford to buy. And keep in mind any additional expenses you are adding to your money budget, including home insurance and taxes!
Cost of Living Research
If you are moving to a new State, like Florida, or even if you are moving to a new town it’s important that when you are coming up with your house budget that you research the cost of living. If the cost of living is higher or lower than where you are coming from, then that could actually have an impact on how much you can spend on a house.
For example, the cost of living in Florida is overall lower than many other states in the US. But it’s still higher than other states. And even within Florida different towns and areas can vary drastically. So it’s really important that you do this research ahead of time before you buy your home.
Home Buying Process Timeline: Searching & Touring Homes
Now that you have been working on your financial situation by reducing debts and saving up money, you should have a reasonable idea of how much you can spend on a home. Knowing what you budget is will help you narrow down your search and keep you reasonable when it comes to actually touring homes.
When it comes to researching or looking at homes, this can also vary depending upon how picky you are and when you happen to find the right home within your budget. It also depends on if you need to move right away, or if you are not in a rush and can take your time to find just the right home.
Everyone’s situation is a bit different. So when it comes to the process of searching and touring homes for sale, some people could take a year or so. Others might only take a few weeks or a months to find the right home.
It’s really all about timing and being prepared. Below are some steps to take to make sure you are fully prepared during the home search process:
1. Browse Homes and Neighborhood Online to See What You Can Afford
Now it’s time for the fun part, browsing for homes! Online real estate websites make it easy for you to search available properties in Florida or in a specific town or neighborhood. You can also filter by price and features, and some of the best listings will include a ton of photos and maybe even videos or 3-d walkthroughs!
When browsing these homes, list the pros and cons of each house based as well as how they will fit with your budget and lifestyle. In general, a townhome or a condominium is usually more affordable compared to a single-family home. However, sharing the walls together with your neighbor means that you will have less amount of privacy for yourself.
Keep in mind also when you are looking for homes that some homes in certain developments or gated communities may have additional fees, such as a homeowners association. You will need to add these to your budget to make sure that you can still afford the home.
This is also a great time to decide whether you want a move-in-ready home, which may cost more money, or if you are open to purchasing a fixer-upper, which could be cheaper but requires some repairs or updates.
2. Monitor Your Target Home Market
When you know your area, the type of home you are looking for and your budget, then it’s advisable that you monitor the market. There may be times when the prices of the homes in the area that you plan to buy are offered at better prices, or maybe you can see a trend that they are all moving upwards.
For example, once we decided to move here to Venice, Florida then we were constantly checking in on the area. We were keeping our eyes out for homes, but we were also looking at things like how fast they were selling and even looking at past sales data to see if prices seemed to be going up or down. This helped us to feel comfortable when it was time for us to jump in and buy our house.
Apart from that, you need to take a closer look at how fast these houses are selling. If the houses that are selling like super fast, then you know that the market is quite competitive. This means that there could be pressure from multiple buyers that will push prices up, and it could lead to bidding wars or you losing out on a home you love if you don’t jump on it fast enough. However, if you see that homes are staying on the market for a while, then you know that you might have more time and maybe even be able to get a favorable deal on the home.
3. Talk With Lenders and Research Loan Program Requirements
If you haven’t already, one thing that you should do before you get yourself too involved in searching for homes is to consult with mortgage lenders and research loan programs to determine the best option for you. One of the reasons why you need to talk with your bank or even a mortgage broker is to see what types of loans you would qualify for given your situation.
Also, this is a great time to inquire more about specific eligibility for down payment assistance programs and what you need to do or provide to them as a part of the loan process. For example, there might be specific requirements if you are looking to go for a VA loan or FHA loan. You can also inquire about interest rates and begin to get some of your documents together that you will need to apply.
4. Get Pre-Qualified / Pre-Approved for Your Loan
Getting a pre-approval letter from your mortgage lender is a critical step to show you are serious about purchasing home. This is a pretty easy process and it just requires you to send over some basic financials and should you meet the basic lending qualifications, then your lender will provide you with a pre-approval letter. However, this is just a preliminary approval – it does not mean you have actually applied and gotten the loan. Actually getting the loan is still subject to a more in-depth process that will happen later.
Most sellers will expect you to have the pre-approval letter submitted with any offer to buy a home, this way they can ensure that you are serious and capable of applying for the mortgage.
There are a total of five essential things that you need to have for your pre-approval letter. You’ll need a good credit score, proof of income and assets, letter of employment verification, and other types of documents such as your driver’s license. If you don’t have much time and are busy with your work, you may choose to apply for a pre-approval mortgage online to save you the hassle of going to the bank manually though it’s highly recommended for you to consult a lender to discuss more the budgeting and loan options directly with them.
We are happy to provide you with some suggestions for reputable mortgage partners you can use here in Florida, but you are in no way obligated to use them. Just let us know!
5. Find a Real Estate Agent Who Helps You (Not Just Sells to You)
A great real estate agent is someone you can really trust and count on. They are there to help you…not sell you!
They should be someone who is there for you during the home buying process. A good agent should take the time to get to know you and listen to what you are looking for in a home. They should also be able to advise you during your home search and guide you along in the process, as well as sharing their local knowledge about the area and neighborhoods.
They are on your team. A good agent is there to help you get the best deal you can and watch out for your interests. It’s also really great to have someone working on your behalf and be the buffer between you and the seller or even the seller’s agent.
Sometimes real estate agents get a bad wrap. Which is a bummer because there are some really amazing real estate agents who are assets to their clients in helping them during the home buying process. But it’s true that not all real estate agents are the same and some will definitely be better than others!
If you are looking to buy a house in Florida, give me a shout. I am a licensed real estate agent in Florida. I’m happy to help answer any questions you have or assist you in finding your dream home in Florida!
6. Start Touring Homes With Your Realtor
Once you have found a great real estate agent that you are comfortable with, then it’s time for you to start really looking at homes! Your agent is there to help you by booking appointments to go look at houses. They can also help by contacting sellers to inquire about the listings and confirm details and get answers to questions you have about particular properties.
Your agent should be able to recommend homes for you, but you can also easily search properties online and if you find a home you want to see, you can just send the listing over to your agent so they can set up a time to get you inside to check it out.
Home Buying Process Timeline: Offer Submission, Acceptance & Closing
Now, the process of buying a home actually can go pretty fast once you are ready to go after a property. Depending upon your local market, there could be competition for buying a great house, especially if it’s a good price and in a good location. It’s advisable that if you find a property you really want that you move on it right away by making a reasonable and fair offer.
This is where a great real estate agent can help you out because they can advise you on the terms that will help get you the best deal while also ensuring it’s reasonable and gives you a good chance at getting accepted.
1. Be Prepared to Put in an Offer & Put Down Earnest Money
Even after all this work, this can still be the hard part for some people. Once you have found the right house, then it’s important for you to psych up and prepare yourself to put in an offer and put down the earnest money! It’s a HUGE step, we know! But you’ve gotta be prepared mentally to do it, otherwise, if you hesitate, then you might just end up losing the perfect house that you really wanted!
It’s understandable to be hesitant because this is a big purchase. But you have to put faith in yourself and the fact that you have done a ton of research already. You’ve gone through the process, you know your budget, and you’ve found the house. Hesitating and doubting yourself will just stress you out and ultimately, it won’t get you where you want to be.
So as long as you prepare yourself mentally for this moment, then you should be confident to move forward.
And you should do it with excitement…you are buying a house!!!
2. Offer Accepted, Inspections, Financing
Typically sellers will review and notify you within a day or so if your offer is accepted, unless they have already specified a date when they will make the decision. Once they accept the offer and everyone has signed it then you are officially under contract!
Real estate is a large purchase, so even though you are under contract there are still some things that need to take place. Things like inspections, finalizing the mortgage, getting insurance, titling, etc. For this reason, many contracts will specify a “closing date” for the house. Most home purchase contracts (at least here in Florida) will have either a 30 day or 45 day close. Sometimes cash deals can close earlier, but it all depends.
All of this is to ensure everything can be accomplished in time before closing, which is when you will officially get the keys!
Typically, most homes will close right around 30 days. Sometimes the closing could be extended out longer, such as 45 days, to ensure there is enough time to get the loan together if it is a busy time or if it’s a complicated loan situation. There are other reasons that closing could be extended out to another date as well, for example, if the buyer and sellers agree on a later date to give enough time for people to move, etc.
Once everything is completed, then you should get the “clear to close” which means that it’s all completed and ready to close the transaction and collect the money (whether it’s a cash purchase or a downpayment)!
Closing is technically the date when you will be given the keys and officially own the property!
The Overall Home Buying Process Chart
In general, these are the steps that you will need to take as a part of the home buying process. We’ve put them here into a chart for you, so you can save the image for future reference or pin for later!
How Old Do You Have to Be to Buy a House (in case you are curious)
For some of you who might be interested to know, in most states of the US you will need to be at least 18 to buy a house. This is because the process requires you to sign legal contracts and get a loan. Although, you could technically own property as a minor or have your name listed as an owner as long as you are able to get an adult to sign with their consent as well.
The Actual Home Buying Process Moves Fast in Florida – So Be Ready!
In the end, when it comes to buying a house the process is not as complicated as it may seem. As long as you have done your research and understand how the overall process of buying a home works, then you should be prepared for what comes your way. When it comes to buying a home in Florida, there are some additional things you should know – especially if you are buying from out-of-state.
But once it comes time to look at homes and start making offers, the home buying process in Florida actually moves quite fast! And a good real estate agent will be with you every step of the way to make sure you feel good about everything, have a clear understanding, and are happy about securing just the home you were looking for.
Here to Help You!
If you are preparing to buy a home here in Florida, no matter if you are in the beginning stages and just want to talk it out and ask questions, or if you are ready to go out and look at properties, I’m here to help! As a licensed real estate agent here in Florida, I’m more than happy to chat with you and share my knowledge to help you narrow down your search and book appointments for you to see properties.
My goal first and foremost is to help you live that Florida life you have been dreaming about!