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A natural consideration when you start shopping for a new home is how long the whole will take. Timing is everything, particularly if you are planning to list and sell your current home as part of the deal or need to plan when you’ll be moving from a rental. The process of purchasing residential real estate can be mapped into a general and fairly reliable timeline, with several caveats for new construction. Be sure to talk to your builder about timeframe once you’ve selected your new home so they can set the right expectation of timing from their end. You should plan on a minimum of four to six months, however it may be longer depending on home size, complexity and market conditions / demand. The following summary of stages that you’ll encounter along the way will help you with timing your shopping process properly:
Stage 1: Mortgage Pre-qualification and Pre-approval
You’ll need to start the house hunting process by shopping for a mortgage if you’re planning on using a mortgage loan to purchase your home. Comparing rates and fees between several lenders is best. Most builders also offer in-house financing through their preferred lender (this is often tied to a financial incentive), you’ll want to make sure to compare their offer and determine if you’re getting the best deal. The most important part of pre-qualification and pre-approval is finding out exactly what your new home budget will be—this can save tremendous time and heartache down the road. Having a pre-approval in hand lets builders and Realtors® know you are a serious and qualified buyer.
By starting the mortgage process early gives you plenty of time to ensure you can come up with all the required documents (tax returns, bank statements, pay stubs, etc.). It also gives you more time to save additional funds for a down payment or make any adjustments to your credit score. If interest rates are anticipated to rise you can also potentially use the opportunity (once you’re a little bit closer to closing) to lock in a guaranteed rate for 90 to 120-days.
Stage 2: Shopping for the Right Home
Once you’ve determined your list of potential neighborhoods or a specific area, it’s time to visit in person. The Guide’s user-friendly search filters will help you streamline this process—maps are provided along with GPS direction, model hours and additional community information. A big benefit to new construction which can expediate the shopping process are consistent model hours. This way you don’t have to wait for an open house or a Realtor® to be available in order to stop in. According to Try Marketing Inc’s Home Buyer Study, most homebuyers visit an average of 8 to10 homes prior to making an offer. The average shopping process will likely take several weeks, potentially longer depending on how specific your needs are and what is available in the market at that time. This is a major decision so be sure not to rush yourself!
Stage 3: The Contract Process
Most contracts on new homes can be completed expeditiously however if there is much back-and-forth between builder & buyer it may take several days. If you’re purchasing a to-be-built home your builder will let you know at what point you need to have your design choices complete (this typically involves a visit or two to their design studio). Though your builder will provide specifics you should plan on about a month from the date of contract to firm up design choices & for permitting prior to construction being started. Check out this article for specifics on what to expect after you sign a contract.
Stage 4: The Construction Process
If you’re buying a quick move-in home the timeline may vary depending on how near the home is to completion. If it is completed there may be several weeks required to make any changes you have specified in your sales contract with the builder (i.e., adding a appliances or garage door opener; swapping out fixtures or flooring, etc.). If your home is being built from scratch it may take anywhere from four-to-nine-months depending on several factors such as if the homesite is ready, how quickly permits can be pulled in that municipality, the volume of homes currently underway in that community and of course the weather. The good news is your on-site sales agent should have a good idea of what the build time will be and can fill you in accordingly. To ensure everything is on track you will have various meetings with your builder at designated milestones throughout the process to keep you up to date on the status of your new home.
Stage 5: Closing the Deal
A typical home loan takes a little less than two months from pre-approval time period when you apply for your mortgage to the time of closing. If you’re building a home that will take months, this obviously won’t be a factor. If you’re planning to buy a quick move-in this might have more of an impact on your closing date. If you have pre-approval ahead of signing the contract you can cut the timeframe down closer to 30-days (rather than 50) so potentially you could move in as soon as a month after contract. The mortgage process involves appraisals, home inspections and several other time-sensitive factors that all impact this timing all of which are designed to ensure your home is a sound investment.
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