Home Buying Process Timeline: A Step-By-Step Guide

Last updated on March 26th, 2024 at 10:18 pm

Buying a home can be exciting if not a bit overwhelming! With many steps involved, it’s wise to have a basic understanding of the Home Buying process timeline before you embark on this adventure.

The timeline can vary slightly depending on individual circumstances – but it generally follows a similar path. This article will prepare you to know what to expect at each phase of the journey. 

Once you have a basic understanding of the home-buying process, you can dive into the first important step: preparation!  

• Understanding the basics of the home buying process is the #1 step before getting started. 
• Financial preparation is key to being able to afford the type of home you want. 
• The timeline of the home-buying process can vary but generally follows a similar step-by-step process. 

When it comes to buying a home, understanding the basics will help you plan your finances and make informed decisions about the type of home ownership that’s right for you.

There are a few different types of home ownership to consider when you’re setting out to buy a property. The most common types are:

• Freehold or Fee Simple: This means that you own the property and the land it sits on outright. You’re responsible for all maintenance and repairs. This is the most common type of homeownership.
• Leasehold: This means that you own the property but not the land it sits on. You’ll have to pay ground rent to the landowner and may have to pay service charges for maintenance and repairs.
  
• Commonhold: This means you own a share of the building and the land it sits on, and you’re responsible for the maintenance and repairs of your share.
  

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Before jumping into buying a home, familiarize yourself with local real estate market trends and current conditions in your area. You may find that in a seller’s market, it’s wise to wait until things cool down or more inventory is available. 

On the other hand, a buyer’s market might push you to get moving more quickly due to favorable prices!

Knowing your market can help you determine the right time to buy and the right price to pay. 

Be warned – if you ask a realtor, they will ALWAYS tell you it’s a good time to buy. I can’t blame them too much – after all, they are salespeople and they make a commission on every sale. 

Take a few days and do your own research – look at the number of homes available in the area you’re considering. If there’s only one or two, or if homes listed for sale are gone in a matter of days, you’re likely dealing with a market that is favorable to sellers. 

• Supply and Demand: When demand for homes is high and supply is low, prices tend to go up. When supply is high and demand is low, prices tend to go down.
  
• Interest Rates: When interest rates are low, it’s generally a better time to buy. When interest rates are high, it may be better to wait. 

That said – If you find the home of your dreams but don’t love the interest rate, there’s always the possibility of refinancing later on when rates drop again. 

• Location: The location of the property will undoubtedly have the biggest impact on its value. Properties in desirable areas tend to be more expensive. 

Now that we’ve covered a few basics, let’s move on to a few ways you can prepare yourself for the journey. To be an attractive buyer when your offer is presented, you’ll want to tackle a few essentials when it comes to money matters. 

Before starting the home-buying process, take a deep dive into your budget. This involves reviewing your income, monthly expenses, and savings. 

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By getting familiar and cozy with your financial situation, you can better determine how much you can afford to spend on a home purchase. 

It’s important to be realistic about your budget and not overspend – you don’t want to end up being “house poor”. 

It’s a good rule of thumb to live within (or slightly below) your means. This can help you avoid years of financial stress in the long run!

Once you have a general idea of your budget, you can begin to explore mortgage options. 

This involves researching different types of mortgages and their terms – such as fixed-rate and adjustable-rate mortgages, points, amortization schedules, etc. 

Come to a general consensus about which loan type you feel is best for you, based on the pros and cons, down payment requirements, and credit score guidelines. 

Don’t fill out the first 10 applications you come across online – shop around a bit for the best interest rates and terms, as this will have a significant impact on your monthly payments. 

Narrow your options down to a few trusted lenders with favorable rates before submitting your info, either online or in person. 

Working with a mortgage broker will allow them to do some of the legwork in shopping around. 

Undoubtedly, the biggest hurdle to buying a home tends to be coming up with the down payment amount.

If you dream of owning a home someday, it’s important to start saving for this step as early as possible. It takes most of us several years to accumulate enough money for a sizeable down payment. 

Luckily there are options today that allow for alternative financing solutions such as government-backed loans with lower down payment requirements or down payment assistance programs for first-time homebuyers.

These options can help make homeownership more accessible, even for those with limited savings.

There are a number of ways to save for a down payment over time, including setting aside a portion of each paycheck, cutting back on current expenses and redirecting those funds towards savings, or looking for additional sources of income – even if temporarily. 

Some loan programs require up to 20% down. Others, such as FHA or VA loans, have better options in terms of down payment assistance. 

Research the requirements of each so you have a general idea of what size chunk of change you need to have saved up. 

Unless you’re an all-cash buyer, you’ll most likely need a mortgage loan to finance the purchase. 

The first step in securing a loan is to get pre-approved by the lender of your choice. This process involves providing information about your financial situation and allowing them to run your credit to find out what you’ll qualify for.  

There are many lenders to choose from – banks, credit unions, farm credit lenders, and mortgage brokers. Shop around and compare rates and terms from different lenders to get the best deal. Ask each one upfront about their various fees and estimated closing costs. 

In addition to interest rates and fees, customer service is also a factor to consider – If you value dealing with an actual person and not a generic voice recording, contact local lenders or credit unions vs. nationwide lenders. 

Once you choose a lender to work with, the loan application process can begin. 

You’ll need to provide documentation such as income statements, tax returns, bank statements, and either your firstborn child or your right arm – your choice!

Ok, I’m kidding about that last part, but it can feel that way sometimes when you’re digging endlessly for paperwork and getting emails requesting that “one last thing”. 

The lender will also run a credit check to determine credit “worthiness” and potential loan options you qualify for.

Once the application has been completed, the lender will review the information and determine whether or not to pre-approve your loan. 

This is the part where you sit home on the edge of your seat and stress out completely until they notify you!

Once pre-approved, you’ll receive a document stating the maximum amount you’re approved to borrow. 

The pre-approval letter can be used to show sellers that you’re serious about buying a home and have the financial means to do it. In addition to that, realtors will want to see this step completed and have the document in hand before showing you homes. 

This step is important – Not only will it help you understand your budget and price range, but it could give you an advantage when making an offer on a home.

Finally – you can get to the most fun and exciting part of the home-buying process!

House hunting can also be pretty overwhelming and time-consuming without proper guidance. Let’s go over some key elements of house hunting and how to make the most of your time searching.

Before starting the house hunt, jot down a wish list of your desired home features and amenities. 

This should include the preferred number of bedrooms and bathrooms, location preferences, square footage, yard size, and other must-haves. 

By having a clear idea of what you’re looking for, you can save time by only viewing homes that meet your basic criteria.

A real estate agent can be a valuable resource in your house-hunting journey. I would strongly urge any home buyer to work with an agent – especially first-time buyers. 

Agents can provide expert advice on the local market, help you narrow down your search, and schedule showings for you. 

An agent who understands your needs and preferences and has experience in your area can save you from making costly and stressful mistakes. Buyers – a good agent can be the difference between making this whole process fun and exciting or an endless headache.

There is no downside, in my opinion, for home buyers to use an agent. In most cases, the seller will be paying the same commission rate either way. You can only benefit from having someone who’s working on your behalf!

Attending open houses is a great way to get a feel for different neighborhoods and home styles. Open houses will be advertised on places like Zillow and your local real estate websites.

Your agent should also be able to notify you of upcoming open houses in the area. 

Come prepared with any questions for the seller or agent. Take notes to help you remember each property so you can compare them later.

House hunting can be a fun and rewarding experience with the right person and proper guidance. 

At this point, you’ve created your wish list, gotten pre-approved, and are (hopefully) working with an experienced agent. 

Now that you’re attending open houses and showings, you’ll be well prepared to make an offer if you find your dream home!

You’re working your way through the process and found a home you love. Making an offer on the property is the next step, and one most real estate agents should be well versed in guiding you through. 

This is the point at which a buyer expresses their intent to purchase the property and outlines the terms of the sale. Here are some important things to keep in mind when making an offer.

An offer to purchase typically includes several components that lay out the terms of the sale. 

These components include:

• Purchase price: The amount the buyer is willing to pay for the property.
• Earnest money: A deposit made by the buyer to demonstrate their commitment to the purchase.
• Contingencies: Conditions that must be met for the sale to go through, such as a satisfactory home inspection or appraisal.
• Closing date: The estimated date on which the sale will be finalized and the buyer takes possession of the property.

Buyers should understand each of these components and how they affect the overall offer. This is one of those times when it’s advisable to have an experienced agent to guide you. 

For example, a higher purchase price may make the offer more attractive to the seller, but could also impact the buyer’s ability to secure financing. 

In addition, a sale price that’s too high could risk the appraisal not meeting the value needed for the loan. 

Once an offer has been submitted, the seller may choose to accept it, reject it, or make a counteroffer. This is where good negotiating skills come into play.

Be prepared to negotiate with the seller to reach a mutually beneficial agreement. This may involve adjusting the purchase price, revising contingencies, or changing the closing date. Don’t stress too much if it takes a bit of back and forth – this is normal!

Work with your real estate agent to ensure they are making informed decisions throughout the negotiation process. If you keep an open mind and are willing to give and take a bit, you will increase your chances of securing a home with lots of interest.

Once the offer is accepted, the buyer typically has a specified number of days to schedule a home inspection. The purpose of the inspection is to identify any major issues with the property that may have been overlooked during the initial walk-through. 

The inspector will evaluate the condition of the home’s foundation, roof, electrical, plumbing, and HVAC systems.

It’s important to choose a reputable inspector who is licensed and insured. The buyer can typically attend the inspection and ask questions. 

The inspector will provide a detailed report noting any issues found during the inspection. The buyer can then negotiate with the seller to have any necessary repairs made or adjust the purchase price accordingly.

After the inspection, the next step is to have the property appraised. The appraisal is an evaluation of the home’s market value. The appraisal will be ordered by your lender and conducted by a licensed appraiser. 

Most lenders will require an appraisal to make sure the property is worth the amount of money being borrowed.

The appraiser will evaluate the condition of the property, as well as the surrounding neighborhood, comparable properties, and a host of other factors. 

Within a week or so after the appraisal appointment date, they will then provide a detailed report to the lender, noting the appraised value of the home and how they came to their conclusion. 

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If the appraisal comes back lower than the purchase price, the buyer and seller may need to renegotiate. If no agreement can be made, the buyer may have to come up with additional funds to cover the difference.

Once you overcome any hurdles involving the inspection and appraisal, you’re in the home stretch of finalizing the deal and scheduling the closing! 

Once the offer is accepted, the next step will be for your lender to finalize the mortgage and prepare for closing. This involves employment verification, reviewing credit reports and bank statements, and verifying funds. 

The lender will then review this information and confirm that the borrower is eligible for the loan.

During this time, the lender may request additional information or documentation, so it’s important to be responsive and provide anything extra they need. 

Once the lender officially approves the loan, they will provide a loan commitment letter that outlines the terms and conditions of the mortgage.

You’re close – I promise!

The final step is signing the paperwork. This typically takes place at the closing, which is a meeting between the buyer, seller, real estate agents, and attorneys.

At the closing, the buyer will review and sign a variety of documents, including the mortgage agreement, the deed, and the title transfer documents. The buyer will also pay any closing costs and provide proof of insurance.

Once all the paperwork is signed and the funds have been transferred, you officially become the owner of the home!

 It’s no fun to read the fine print, but review all the documents carefully and ask any questions before signing your name. 

Owning a home is a huge financial obligation – don’t skim through important documents just because you’re anxious to move in.

The home-buying process can take several months from start to finish. 

However, with the right team of professionals and a clear understanding of the timeline, you can successfully navigate the process and find your dream home with limited stress and frustration.

Moving into a new home is always an exciting part of the journey, but this, too, can be a stressful time. 

There are many things to consider when planning a move – packing, hiring movers, transferring utilities, informing the post office, etc. 

Before moving day, it’s wise to create a plan. Decide on a moving date that aligns well with the anticipated closing date, hire a reputable moving company, and begin organizing and packing ahead of time so you aren’t stuck at the last minute. 

Remember to notify utility companies, banks, and other important contacts of the change of address.

Once the move is complete, it’s time to celebrate! This is a great opportunity to invite friends and family to see the new home and get settled in. 

It’s also a chance to meet new neighbors and get to know the community.

With proper planning and organization, the journey to buying a home can be a smooth and enjoyable experience.