10 Steps to Buying a House
Updated: Mar 31, 2019
The specific way you progress through a home buying transaction varies depending on the real estate laws and customs where you live. But you will discover many steps to buying a house that are standard, even though they might not be accomplished in the same order in every location.
You'll feel more confident about your home buying journey when you understand what is required of you and every other person who is involved in the transaction. This guide takes you through it, and shows you that you've got only 11 steps to buying a house.
Step 1 to Buying a House: Get Your Finances in Order
Your credit reports are an ongoing record of how you manage your finances. You must know exactly what your credit reports say about your financial history before you apply for a mortgage, because the reports play an important role in the mortgage approval process and in determining the interest rate and other loan terms that a lender offers you.
If you haven't looked at your credit reports, you might be surprised at their contents, because errors are common. Ideally, you don't want any late payments. One late pay is bad; four will kill you.
Background Reading
What's on Your Credit Report and How Did it Get There?How To Check Your Credit ReportClean Up Your Credit ReportUnderstanding Your Credit ScoresHow to Improve Your Credit Scores
Step 2 to Buying a House: Get Familiar with the Mortgage Industry
Finding the right loan and lender is crucial to your home buying success. It's up to you to determine which lender is best for your needs, and it's always a good idea to have at least a bit of background about the loan process before you talk to a lender. Consider asking your agent for a referral.
Background Reading
What's the Difference Between a Mortgage Broker and a Bank Loan Officer?Understanding Your Debt to Income RatioShould You Choose an Adjustable Rate Mortgage?FHA Loan BasicsVA Home Loan FactsBi-Weekly Mortgage Payment PlansShould You Really Buy Discount Points?Facts About Private Mortgage InsuranceWill You Have a Mortgage or a Deed of Trust? Why Does it Matter?Watch Out for Loan Fraud
Step 3 to Buying a House: Get Pre-Approved for a Mortgage
Do you know how much house you can afford? Probably not, unless you've talked with a lender.
Pre-approval helps you in other ways. Consider this scenario. A home seller gets two similar offers. One is accompanied by a letter from the buyer's bank that states she is pre-approved for a mortgage in the amount of the offer. The other has no supporting documents. Which offer do you think the seller will consider first?
Background Reading
Pre-Qualification vs. Pre-Approval, Which Do You Need?Using Online Mortgage Calculators to Analyze Your Loan Possibilities
Step 4 to Buying a House: Determine Your Wants and Needs
Buying a home isn't as difficult as you might think, even if you're short on funds, but the process will go a lot smoother if you get familiar with your real estate market and narrow down your wants and needs before you start looking at houses.
Background Reading
Sort Out Your Wants and You NeedsConsidering Resale PotentialWhen You Need Help with Downpayment Funds
Step 5 to Buying a House: Learn to Work with Real Estate Agents
Real estate agents represent buyers, sellers, or both -- and, in some states, they can work as neutral facilitators for either party. It's essential to understand agent duties and loyalties before you make that first phone call. Ask your agent to explain fiduciary.
Background Reading
Does Your Agent Work for You?How To Work with a Seller's AgentWhat You Should Expect from a Buyer's AgentHow To Hire a Buyer's AgentHow a Buyer's Agent Becomes a Dual AgentCommon Myths About Working with Real Estate AgentsYour Duties to Your AgentDealing with Incompetent and Unethical People
Step 6 to Buying a House: Start Searching for a Home
Your agent will send listings to your cellphone. You'll also pick up House For Sale magazines and read classified ads in your local newspapers. You'll probably spend an inordinate amount of time surfing the Internet for homes. You might even plan afternoon drives to preview neighborhoods. Those are all excellent ways to see what's available. Here are some tools to help you narrow your home buying search.
Background Reading
Consider the Houses that Others OverlookSearch Public Versions of Multiple Listing Service Web SitesFind Real Estate Agent Web SitesBrowse Real Estate Search Engines and NetworksFind For Sale By Owner PropertiesFind Home Sale Ads in PrintFind Foreclosed Homes
Step 7 to Buying a House: Handle Pre-Offer Tasks
Deciding whether or not you want to buy a house involves a look at its structure and its features, but there are many other topics that are every bit as important to your purchase. Here are a few topics you should explore before you make an offer.
Background Reading
Consider a Home InspectionTalk to the Neighbors Before BuyingCheck the Comparable Sales
Step 8 to Buying a House: Make an Offer
There's no one set of instructions that can cover all the differences in real estate laws and customs that exist throughout the United States, so the mechanics of making an offer and its specific contingencies depend greatly on your location. However, there are some home buying tips that can help you fine-tune your offer, no matter where you live.
Background Reading
What Comes With the House? Contract ConsiderationsWhat Should the Seller Disclose?Determine if Lead Paint Disclosures Are RequiredDecide How Much to OfferAsking for Possession Before ClosingSpecial Considerations for For Sale By Owner Purchases
Step 9 to Buying a House: Home Inspections and Other Tests
In some states, home inspections are accomplished before the final purchase contract is signed. In other states, inspections take place after an offer is finalized. No matter when you do them, it's critical to decide which inspections and tests you want to perform.
Talk with your real estate agent or other advisor to find out when inspections should be handled and if additional types of testing are important for your specific area.
Background Reading
Order a Full Home InpsectionTesting for Radon GasLooking for Molds and MildewLead Paint Disclosures & Inspections for Pre-1978 HomesIs There a Private Well on the Property?Understanding and Checking the Septic SystemShould You Buy a Home Warranty?
Step 10 to Buying a House: Avoiding and Correcting Last Minute Problems
As your closing date nears, everyone involved in your real estate transaction should check its progress on a daily basis, because staying on top of things means you'll know immediately if there's a problem that must be dealt with. Here's a bit of information that focuses on a few common problems that home buyers must deal with before they close on a house.
Background Reading
