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The Process of Buying a House – Home Buyer Steps to Follow

aerial view of neighborhood
Photo by Matt Donders on Unsplash

For first-time buyers, the process of buying a house can be daunting. Even for those who’ve done it before, the task of hunting for a home and making the purchase can still seem intimidating. Organizing the process into simple steps can make it much easier to cope with, allowing you to enjoy the excitement of house hunting without all the stress.

1. Determine Your Budget

The first step in the process of buying a house is determining your budget. You want to figure out approximately how much house you can afford, and that will depend on various factors:

  • Your income: The amount you’d make on mortgage payments shouldn’t be more than 36% of your monthly income. Some lenders may go higher, but the loan won’t be ideal.
  • Down payment: You should save for a down payment of approximately 10% to 20% of what you’d be buying. This will help keep monthly payments down while also making loan approval more likely. The more you can pay down, the better off you’ll be.
  • Prequalification/preapproval: Buyers can interview with lenders to determine how much house they can afford. The prequalification process involves an examination of their finances, assets, and credit, and the lender uses that information to determine how much they’d lend the borrower.

Preapproval can help expedite the process later on since it gives sellers confidence in your ability to secure financing. Also, it makes it easier to get approved for a loan when it comes time to close on a home.

2. Pick a Location

The next step is to choose a location. You’ll have several factors to consider, such as:

  • The price of the neighborhood: Each neighborhood has its own general price range, and that will be instrumental in determining the sale price of any houses in the area.
  • Proximity to work, shopping, schools, etc.: You want to make sure the neighborhood you choose is in close proximity to your work, local schools, shopping areas, and other important locations.
  • Overall appeal: Each area has its own aesthetic, so make sure you pick a place you enjoy looking at.

Different families have different needs, so some items may be more important to consider than others. For instance, if you don’t have children, then researching local schools won’t be on your list. If you don’t have a car or simply want to save on gas, finding a walkable neighborhood would be a higher priority.

3. Get a Real Estate Agent

One of the central steps you’ll need to take is choosing a good real estate agent. Some characteristics to look for include:

  • Licensed and credentialed
  • A good track record
  • Experienced
  • Knowledgeable about the area
  • Amicable

An agent you enjoy working with and who has a proven track record will be able to help you find the right home for your needs. In addition, they’ll have the expertise to walk you through every step in the process of buying a house.

4. Start Touring Houses

Once you have your budget, location, and a skilled agent, it’s time to start house hunting. Your agent should be able to find listings that match your needs. As you tour each house, make sure you take notes or pictures. You’ll be looking at quite a few homes, and they may start to blend together, so your notes and photos can help.

5. Ask Questions and Make an Offer

As you tour houses, you’ll (hopefully) find a few you can see yourself living in. Make sure to ask questions to the seller to make sure the home you choose is a good fit. Some questions you might ask include:

  • What’s included in the sale?
  • How are the neighbors?
  • Have you had any problems with the house? Are there any current problems?
  • How old is the home?
  • Why are you selling?
  • Have there been any major repairs? Renovations?
  • How old is the roof?
  • How’s the insulation?
  • What is the foundation made of?
  • Who performed those renovations/repairs?
  • How long has the home been on the market?

These questions can give you an idea of the home’s condition. In addition, you’ll get a decent grasp of how much room you have for negotiation. As you work with your real estate agent, you’ll be able to get enough information to make an offer on the home of your choice.

6. Get a Home Inspection

Once the seller accepts your offer (which may or may not happen after some negotiation), get a home inspection. Many purchase contracts are contingent upon a home inspection, giving you the freedom to renegotiate or back out of the deal if needed.

If the inspection reveals any major problems, you may be able to negotiate a lower price or require the seller to get them fixed.

7. Talk to Your Lender

Once you’re satisfied with the home’s condition and the price, it’s time to finalize your mortgage. Talk to your lender get them all the paperwork they need, and apply for a loan. Your lender should arrange for an appraisal to make sure you’re paying a fair price.

Your lender will also make arrangements with the title company to make sure all paperwork related to the house is handled properly.

8. Close the Sale

hand signing home purchase agreement
Image by Pixabay

The final step in the process of buying a house is closing the sale. Sign and submit all relevant paperwork, and then wait. It should take a couple days for everything to be approved, and once it is, you’ll have successfully purchased your home.

Buying a house represents a significant investment, whether you’re up in New England or down south in Georgia or Texas. Naturally, you’ll want to protect that investment. A home warranty can help you cover repairs on important systems and appliances, so take some time to examine your options.

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