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When you start shopping for a new home the length of time the process will take is a natural consideration, 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. Once you’ve selected your new home be sure to talk to your builder about timeframe so they can set the right expectation of timing from their end. According to experts at realtor.com, you should plan on a minimum of four months. They provide the following summary of stages that you’ll encounter to ensure you’re timing your shopping process properly:
Stage 1: Mortgage Pre-approval
If you’re planning on using a mortgage loan to purchase your home you’ll need to start the house hunting process by shopping for a mortgage. It’s typically best to compare rates and fees between several lenders. It’s likely that your builder will also offer in-house financing through their preferred lender (this is often tied to a financial incentive) and you’ll want to make sure you’re getting the best deal. The most important part of pre-approval is finding out exactly what your new home budget will be—this can save tremendous time and heartache later on down the road. Having a pre-approval in hand will let Realtors® and builders know that you are a qualified buyer.
Starting the mortgage process early will give you ample time to ensure that you can come up with all of the documents that they will require (tax returns, bank statements, pay stubs, etc). This will also give you more time if you need 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 whittled down your list to a few communities or a specific area, it’s time to visit in person. Be sure to use The Guide’s user-friendly search features to help you streamline this process—this will provide maps, model hours and additional community information. A benefit of new construction is that the model hours are consistent so you don’t have to wait for an open house or a Realtor to be available in order to stop in which can expedite the shopping process. According to realtor.com, most homebuyers see an average of 10 homes prior to making an offer. It is safe to figure that the shopping process will likely take several weeks, potentially longer depending on how particular your needs are and what is available in the market at that time. Be sure not to rush yourself, this is a major decision!
Stage 3: The Contract Process
Most contracts on new homes can be completed fairly expeditiously though it may take several days if there is much back-and-forth between builder & buyer. If you’re purchasing a to-be-built home your buyer 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 will vary great depending on how near the home is to completion. If it is already done then there might be several weeks required to make any changes that you have specified in your sales contract with the builder (i.e., swapping out flooring or fixtures, adding a garage door opener or appliances). If your home is being built from scratch it is typically a four-nine month process depending on several factors such as if the homesite is ready, how quickly permits can be pulled in that municipality and the volume of homes currently underway in that community. The good news is that your sales counselor should have a good idea of what the build time will be and can fill you in accordingly. You will have various meetings with your builder at particular milestones throughout the process to ensure that everything is on track and you are 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 the time of pre-approval 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 on a quick move-in this might have more of an impact on your closing date. If you have preapproval 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. The good news is that these things are all designed to ensure that your home is a sound investment.
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