Buying a house requires a lot of time and effort, but these 10 steps can help make the home buying process manageable and help you make the best decisions possible.
Step 1: Start Your Research Early
Start looking at real estate listings online. Make a note of particular homes you are interested in and areas/neighborhoods you like. Let us know what you're needs are (yard, big kitchen, number of bedrooms, etc.) so we can start to send you homes you might like.
Step 2: Determine How Much House You Can Afford
Get in touch with a Mortgage Lender to discuss your financial situation. They do not have to pull your credit or even get documentation from you to give you a general idea of what's in your affordability range. This is ideal if you're about 6 months to a year out from purchasing just so you can start to get an idea of what the homes look like in your price range. If you are looking to buy sooner, skip to step 3!
Step 3: Get Preapproved For A Mortgage
To get preapproved, you will provide some financial information to a lender, such as your income, work history, how much money you have in savings, and how much debt you have on a monthly basis. This can be done securely online or in person at their office. Your lender will review this information and tell you how much they can lend to you.
Step 4: Tell Your Real Estate Agent That You Are Preapproved
Your Realtor and Lender will work closely to make sure you're staying within your price range, and that the homes you're interested in meet the lending guidelines required. Realtors are essential in home buying and selling! They have extensive knowledge about the market area, great negotiating skills to get you the best deal, and can help you find your dream home before it even hits the market by tapping into their network of colleagues. And best of all, it doesn’t cost you anything to use an agent – they’re compensated from the commission paid by the seller of the house.
Step 5: Shop for Your Home and Make an Offer
Start touring homes in your price range with your Realtor. It might be helpful to take notes on all the homes you visit. You will see a lot of houses! It can be hard to remember everything about them, so you might want to take pictures or video to help you remember each home.
Make sure to check out the little details of each house. For example:
Test the plumbing by running the shower to see how strong the water pressure is and how long it takes to get hot water
Try the electrical system by turning switches on and off
Open and close the windows and doors to see if they work properly
It’s also important to evaluate the neighborhood and make a note of things such as:
Are the other homes on the block well maintained?
How much traffic does the street get?
Is there enough street parking for your family and visitors?
Is it conveniently located near places of interest to you: schools, shopping centers, restaurants, parks, and public transportation?
Take as much time as you need to find the right home. Then work with your real estate agent to negotiate a fair offer based on the value of comparable homes in the same neighborhood. Once you and the seller have reached agreement on a price, the house will go into escrow, which is the period of time it takes to complete all of the remaining steps in the home buying process.
Step 6: Get a Home Inspection
Typically, purchase offers are contingent on a home inspection of the property to check for signs of structural damage or things that may need fixing. Your real estate agent usually will help you arrange to have this inspection conducted within a few days of your offer being accepted by the seller. This contingency protects you by giving you a chance to renegotiate your offer or withdraw it without penalty if the inspection reveals significant material damage.
Both you and the seller will receive a report on the home inspector’s findings. You can then decide if you want to ask the seller to fix anything on the property before closing the sale. Before the sale closes, you will have a walk-through of the house, which gives you the chance to confirm that any agreed-upon repairs have been made.
Step 7: Work with a Mortgage Banker to Get All Documents Required For Your Loan & To Choose the Best Loan Program For You
Lenders have a wide range of competitively priced loan programs to help find something that fits your needs. You will have many questions when you are purchasing a home, and having an experienced, responsive mortgage lender assist you can make the process much easier.
Every home buyer has their own priorities when choosing a mortgage. Some are interested in keeping their monthly payments as low as possible. Others are interested in making sure that their monthly payments never increase. And still others pick a loan based on the knowledge they will be moving again in just a few years.
Step 8: Have the Home Appraised
Lenders will arrange for an appraiser to provide an independent estimate of the value of the house you are buying. The appraiser is a member of a third party company and is not directly associated with the lender. The appraisal will let all the parties involved know that you are paying a fair price for the home.
Step 9: Get Your Loan Approved, Finish the Required Lending Conditions, & Schedule the Final Walk-Through of Your New Home
As you can imagine, there is a lot of paperwork involved in buying a house. Your lender will arrange for a title company to handle all of the paperwork and make sure that the seller is the rightful owner of the house you are buying. Your lender will also make sure you've supplied all required documentation for the loan in this step, and that you are almost ready to buy the home.
Your Realtor will set up a time for you to walk through your new home one more time before buying, making sure any repairs were completed and the home is in the condition you agreed upon when you made the offer on the property.
Step 10: Close the Sale
At closing, you will sign all of the paperwork required to complete the purchase, including your loan documents. Then the documents are sent back to the lender to review and the loan is ready to fund! Money is wired to the title company, the seller receives their money from the sale, and the county recorder is asked to put the property into your name - As the new legal owner! Once that is done, you are ready to get your keys and move into your new home!