The Process of Buying a House in Ten Steps
You’ve decided you are ready to buy a home. Congratulations!
One of the keys to making the process of buying a house easier and more understandable is planning. Being well prepared, and knowing what to expect can make the experience much more enjoyable for you.
Our ten steps can help you know what to expect when buying your first home.
- Determine what you can afford. Since you probably won’t be paying cash for a new home, it’s important to determine what loan amount and monthly payment you can afford. By applying for a mortgage before you begin looking for a home, you will be better prepared to search for properties that are a fit for your finances. Reviewing your credit, income and other information ahead of time will also allow you to identify and resolve any issues that may create hurdles to completing your home purchase.
- Determine what you want. Selecting the right home is one of the most important steps in the process of buying a house. This may sound easy, but over six million new and existing homes are sold each year. That’s a lot to choose from. The challenge is finding the property that best meets your needs. Make a list of the features and benefits you are looking for and consider your needs down the road.
- Find a real estate agent. Buying and selling real estate is a complex matter. The maze of forms, contracts, inspections, marketing, pricing, and negotiating can certainly be daunting; but that’s what licensed real estate agents are for. Select an agent to help you through the process of buying a house. Consult with friends and family, co-workers, or associates to find the real estate agent that’s right for you.
- Find a house to purchase. Based on your needs and desired features, your real estate agent will show you appropriate properties. Most likely you will look at several properties. To keep things straight in your mind, take along a camera and a notepad. Make notes of the features, likes, and dislikes for each property.
When you find a property you like, investigate it further. Check out the overall neighborhood. Look into the area schools and amenities, and look up the prices of comparable listings to get an idea of the market. Your real estate agent and loan officer can help you with this information.
- Negotiate the price. When you've identified a house you want to buy, your real estate agent will prepare an offer to purchase. This is the first step in negotiating. The offer will contain all the terms for purchasing, including price and contingencies — such as a successful home inspection and financing.
If you want to bargain, you'll need to mentally prepare yourself to walk away from that house if you don't get your price. One way to accomplish this is to pick two houses that you like. Bid on the first one, and if that house goes to someone else, start bidding on the second one.
- Have the house inspected. Once your offer is accepted with the contingency of a home inspection, you'll call in an inspector. Your real estate agent can recommend one. If the inspector identifies any undisclosed problems with the home, you'll be able to renegotiate with the seller to either lower the price or make the repairs.
- Complete the Financing. Your Mortgage Loan Officer can walk you through the process of completing your mortgage transaction. Depending on the loan program you have selected, you may be asked for additional supporting documentation. This may include income documentation (pay stubs, W2’s or tax returns), asset documentation (bank statements, etc.), identity information (social security card or driver’s license), or credit documentation, among other things.
Your loan officer will also order a real estate appraisal for you. The appraisal will include a full-market analysis and market value of your selected home. The appraised value of the home will be the basis for your loan amount and loan terms.
- Buy Homeowner’s Insurance. No one would drive a car without insurance. And when buying your first home, no homeowner should be without homeowner’s insurance. Homeowner’s insurance provides you with protection against fire, theft, and liability, and is required on all mortgaged properties.
- Close the deal. “Closing” is when all of the necessary paperwork needed to complete the transaction is signed. Closing is usually held in an office setting, sometimes with both the buyer and the seller at the same table. The result of the closing is that title to the property is transferred from the buyer to you… and the keys are yours!
- Move in and enjoy. You’ve done it. You’ve looked at properties, made an offer, obtained financing, and closed on your new home. The home is now yours, and it’s time to move in. You will also want to make sure you have acquired the needed utilities for your new home — items such as water, electricity, sewage, gas, etc.