10 Steps to Buying a Home
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
As soon as you can, start reading
Web sites, newspapers, and magazines that have real estate listings. Make a
note of particular homes you are interested in and see how long they stay on
the market. Also, note any changes in asking prices. This will give you a sense
of the housing trends in specific areas.
Step 2: Determine How Much House
You Can Afford
Lenders generally recommend that
people look for homes that cost no more than three to five times their annual
household income if the home buyers plan to make a 20% down payment and have a
moderate amount of other debt.
But you should make this
determination based on your own financial situation. Use our Affordability Calculator to
see how much house you can afford.
Step 3: Get Prequalified and
Preapproved for credit for Your Mortgage
Before you start looking for a
home, you will need to know how much you can actually spend. The best way to do
that is to get pre-qualified for a mortgage. To get pre-qualified, you just need
to provide some financial information to your mortgage banker, such as your
income and the amount of savings and investments you have. Your
lender will review this information and tell you how much we can lend you.
This will tell you the price range of the homes you should be looking at.
Later, you can get preapproved for credit, which involves providing your
financial documents (W-2 statements, paycheck stubs, bank account statements,
etc.) so your lender can verify your financial status and credit.
Step 4: Find the Right Real
Estate Agent
Real estate agents are important
partners when you’re buying or selling a home. Real estate agents can provide
you with helpful information on homes and neighborhoods that isn’t easily
accessible to the public. Their knowledge of the home buying process,
negotiating skills, and familiarity with the area you want to live in can be
extremely valuable. 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. 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:
Ø Test the plumbing by running the
shower to see how strong the water pressure is and how long it takes to get hot
water
Ø Try the electrical system by
turning switches on and off
Ø Open and close the windows and
doors to see if they work properly
Ø It’s also important to evaluate
the neighborhood and make a note of things such as:
Ø Are the other homes on the block
well maintained?
Ø How much traffic does the street
get?
Ø Is there enough street parking
for your family and visitors?
Ø Is it conveniently located near
places of interest to you: schools, shopping centers, restaurants, parks, and
public transportation?
Ø 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 Select Your Loan
Lenders have a wide range of
competitively priced loan programs and a reputation for exceptional customer
service. You will have many questions when you are purchasing a home, and
having one of our experienced, responsive mortgage bankers 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: Coordinate the Paperwork
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.
Step 10: Close the Sale
At closing, you will sign all of
the paperwork required to complete the purchase, including your loan documents.
It typically takes a couple of days for your loan to be funded after the
paperwork is returned to the lender. Once the check is delivered to the seller,
you are ready to move into your new home!
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