10 Steps to Buying a Home

1. Preliminary Research

Use a mortgage calculator to find out how much house you can afford. A mortgage calculator will factor in your monthly income, expenses and outstanding debts, along with the amount of your down payment, loan term and interest rate to figure the affordable home amount. Calculating will give you an idea of what your price range will be when shopping for a home. During your preliminary research is also a good time to review your credit and fix mistakes, if any.

Contact a Realtor or real estate agent to guide and represent you through the home buying process. Many first-time home buyers are under the misconception that they must pay the buyer’s agent, when in reality, it is the seller who pays commission to both the listing and the buyer’s agent. You have nothing to lose and everything to gain by choosing a real estate agent that is familiar with the neighborhood in which you are looking to purchase a house.

2. Find a Lender, Get Pre-approved

Real estate agents, because they work so closely with other industry professionals, can often times refer you to a home mortgage lender, so it’s a good idea to start by asking your real estate agent to point you towards a mortgage lender they know and trust. Once you’ve located a mortgage lender, get pre-approved. Pre-approved means that your income and credit status are verified and that you are approved for a financial loan.

3. Decide Your Must-Haves

Know your wants vs. needs. Analyze your lifestyle, both now and ten years from now. Do you have children or do you plan on having children? Will you need to be in a neighborhood with the best schools? Will you need to be close to public transportation or within a certain distance of your workplace?

Having a list of criteria to provide your real estate agent will help your agent find homes that meet the needs of your lifestyle and also personal tastes. Your list may also include things you don’t want, such as a pool, which may either pose a risk to children or add monthly costs to the maintenance of your home. Either way, having a list defines the type of property that makes sense for you.

4. Shop for a House

Actually, shop for a neighborhood first, then shop for a house. There’s a reason the real estate slogan always seems to be location, location, location and that’s because you can change the house, but not the neighborhood. Your real estate agent will be able to help you find which neighborhoods have the nicest surroundings based on your price range. This will narrow your search to then look for homes within that neighborhood that have the features you’ve stated on your list of criteria are crucial.

5. Make an Offer

When your real estate agent shows you a house that you can see yourself living in for years to come, make an offer! Your real estate agent will know how to make your offer seem most enticing to the seller and hopefully stand out among the other offers put on that house. This is where having a letter of pre-approval comes into play, because it increases the chance the seller will accept your offer over offers from other buyers that don’t.

6. Get the House Insured and Appraised

Congratulations! Your offer has been accepted and your real estate agent, the seller’s real estate agent or a transaction coordinator will open escrow.

Now you’ll want to get homeowner’s insurance policy to cover the cost of the home and it’s contents in the event of a fire or other hazard. You’re probably asking yourself why you’d want to buy insurance for a house that you don’t yet own. The reason behind this is that homeowner’s insurance is a lot of times necessary in obtaining the home loan for which you’ve been approved.

At this point, you should send your lender the escrow officer’s information and order an appraisal. This is where a third party decides on the home’s value based on the recent comparison of similar homes around it. The appraisal determines if the home’s value is at or less than the amount of the loan for which you’ve been approved.

7. Accept Seller Disclosures

The known condition of the home is spelled out through the seller disclosure and may reveal the presence of lead paint, a pest problem or other issue of concern for which the Seller Disclosure Act makes it a requirement to divulge to the buyer before the purchase is made. This is your chance as a buyer to evaluate and question if the condition of the house merits the price you’re about to pay.

8. Schedule a Home Inspection

A home inspection may further reveal the home’s condition, not known to the seller and therefore not disclosed by the seller in the previous step. If the in the home inspection, a health or safety issue arises or it appears other repair is needed, your real estate agent can negotiate with the seller to adjust the sale price or the seller can agree to make repairs before closing.

9. Contingencies and Final Walk-Through

A contingency contract lets you back out of buying the home last minute. Perhaps you’d want to do this is if, for example, your loan is denied due to issues found during the inspection process and you and the seller couldn’t agree upon the completion of a pricey repair. But if everything checks out and you’re certain you want to buy the home post-inspection, then you’ll have a deadline in which you’ll need to commit by removing contingencies. Perform a final walk-through to ensure that nothing has changed since the home inspection.

10. Closing the Sale

You’re almost done! In the final stage of the home buying process is when you sign the loan and escrow documents and deposit funds. Unless otherwise stated, the house is yours upon recording deed of trust, seller’s reconveyance and property deed in the public records. Congratulations, you are now a homeowner.