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Timeline for buying a house
Our current lease is up at the end of August and we are hoping the timing works out so that we can buy a house at the time our lease is ending. When should we start the process of getting pre-approved for a loan, finding a real estate agent, seriously looking at houses, etc? We?ve been stalking the MLS listings daily for the past year and there are lots of houses that we?ve liked in our price range, so I don?t think it will take long to find one that is suitable for us. My initial thought was in May because, based on what I?ve read, many homeowners take between 2 to 3 months to close on a house after finding one. However, I realize it could take much longer depending on if it?s a short sale or bank-owned home (which we are hoping to avoid).
Does that timeline sound right to you? We could start earlier, but I?m afraid we might find a house too soon (we would have to pay a pretty hefty fee to end our lease early). However, I don?t want to wait too long, because after our lease is up, we would switch to the month-to-month rate, which is an extra $400/mo. I know there is no guarantee of closing on a home around the time our lease ends in August, but we?re aiming to be as close as possible. Any advice would be appreciated. Thanks!
Re: Timeline for buying a house
May could be a great time to start looking. Remember that once you find a place, you'll have to deal with the offers (and possible counter-offers) home inspections and any repairs you need to discuss, then financing. Getting pre-approved will help you know what price range you want to stick with and will make you more appealing to sellers.
I definitely think that each person's experience will be different, but we started looking in October due to an astronomical rent increase when our lease was due at the end of November, and now we are closing in just 2 weeks!
We are paying the month to month rate for our apartment this month because we felt it was feasible to take that risk. One thing that we didn't know starting this process, but that has definitely worked in our favor, is that your first mortgage payment usually won't come due for 2 or 3 months after getting into the house, and depending on your lender, your mortgage may be due in the middle or end of the month. Ours will be due at the end of the month, and we won't have a payment until the end of February.
I would definitely start researching mortgage companies and options in your area, and ask around for different realtor recommendations. If there is a first time homebuyer grant offered in your state, you may want to go ahead and take the required class - you may already know most of the information, but they can help you find resources in your area such as home inspectors, mortgage companies, etc.
Good luck! This is such an exciting (and stressful... and nerve wracking... and exciting!) process!
I would start now to get your finances in order so that you are prepared for the extra expenses that come with buying - downpayment, closing, inspection, repairs/renovations, moving, utilitly start ups, decorating and furniture/appliances, yard items , tools etc. Allow for a month to month option. Have an emergency fund in place and pay off/down credit cards.
You can indicate a closing time (after x month before x date) request in your offer. When we bought our current house (April) closed early June and rented back to the seller for 6 weeks.
I am focusing on the financial aspect since you seem to be saying that $400 a month more would be difficult to handle. If that is so - you sound un prepared for homeownership.
Keep the total (mortgage+PMI+insurance+taxes+HOA+utilities) no more than 25-28% of your TAKEHOME pay. 30-35% in a HCOL area. Less if you have alot of other debt.
We have been saving for the past year and already have a savings goal that we will be meeting by August in order to have a down payment, closing costs, appliances, e-fund, etc and have no CC debt. The only reason why I mentioned the $400 extra for a month to month rate is because I REALLY don't want to pay such a ridiculously high rate. Our rent already went up by $120 recently. We can afford it, but the month-to-month rate is about $500 more than our anticipated mortgage payment, so I would rather pay a mortgage payment in September than pay for an overly expensive apartment because we are on a month-to-month basis. It just feels like a total waste of money, so I would like to avoid it by closing on a house by the end of August if possible.
Thanks for the advice!
11-13-10
Planning + Married
I have heard about this! My understanding is that mortgage payments are due after the month has ended, so we if we closed on a house on say, September 1st, our first mortgage payment wouldn't be due until October 1st (or potentially the 31st like your lender). It's definitely a plus.
11-13-10
Planning + Married
We closed on June 3rd and our first payment was due on August 1. However, in our closing amount (the cash we had to bring to the table for fees, interest, prepaids and our deposit) there is a calculation for a good chunk of interest. If we were to close on June 30th, our mortgage would still be due August 1 but we would have not brought much to the table for interest. It was several hundred dollars but I just wanted to mention it.
Our lease was going to be up at the end of May.
We got serious about finding a house in the middle of March.
That wasn't enough time.
In the end, we signed a new construction contract at the end of May, signed a one-year lease on our apartment, and bought out the lease with an early termination fee ($1K) when our home was finished in October. The buyout was still cheaper than paying a month-to-month lease because the rates were so much higher.
We were in the same position as you this year. Our lease ended at the end August, so we started looking in April. It worked out really well because we ended up closing on our house in July but the first mortgage payment wasn't due until September. Even though it sounds like we gave ourselves plenty of time, we were under contract with one house that ended up falling through at the appraisal stage at the end of May. So we had to go through the whole process again, but the home we ended up buying was a bank owned home so we had to deal with that, too. I think May is good, but you always have to expect the unexpected!
We put an offer on our house in at the beginning of April, closed at the end of May and moved in June. Our first mortgage payment wasn't due until July 1. Check with your lender to see what kind of closing timelines they offer. Ours would only offer a 30-60 day closing.
We really enjoyed having an extra 3 weeks to do things to the house like paint and change a few things before we actually moved.