It’s easy to let your emotions take over when you’re thinking about buying a home. You track homes for sale on your home navigation app, adjusting your schedule so you can take tours and study creative financing alternatives that might allow you to buy a house with little or no money down before you realize it.
It’s all too easy to end up in a house you can’t afford, and that error can have a long-term impact on your opportunity to generate money. Understanding the processes in the home-buying process, on the other hand, will help you make educated decisions regarding your purchase.
Let’s break down the home buying process so you can feel confident during your entire home-buying journey.
How to Buy a House Step by Step?
Buying a house takes a lot of time and work, but following these 10 Steps of the Home Buying Process can help you manage and make the best decisions possible.
Step 1: Begin by Researching
Start by reading real estate listings-related Web sites, newspapers, and periodicals. Make a list of properties you like and keep note of how long they’ve been on the market. Keep an eye on any changes in the asking price. This might give you an idea of what’s going on in the housing market in your area.
Step 2: Determine how much you can spend
If homebuyers expect to make a 20% down payment and have a moderate amount of existing debt, lenders generally recommend that they shop for homes that cost no more than three to five times their yearly household income. However, you should base your decision on your particular financial situation.
Make a list of must-have home features once you’ve established a rough budget. The size, location, and amenities of your future home will most likely be determined by your budget.
Step 3: Get Prequalified and Preapproved for Mortgage
Buying a home with cash is the best option. You’ll need to know how much you can spend before you start looking for a house. Getting prequalified for a mortgage is the best way to do it. To get prequalified, simply provide your mortgage banker with certain financial information, such as your income and the amount of savings and investments you have. This information will be reviewed by your lender, who will tell you how much they can lend you. This will inform you of the pricing range of the homes you can consider. You can then get preapproved for credit by supplying your financial documentation (W-2 statements, paycheck stubs, bank account statements, and so on) so your lender can verify your financial situation and credit.
Step 4: Find the Right Realtor for you
Although your house hunt may begin online, it should not finish there. You may do a lot of research on your own, but when it comes to selecting and obtaining your ideal property, you need the assistance of an expert.
A realtor can assist you in the following areas:
- Identify market trends, new developments, buyer demand, and the overall state of the market.
- Offering price: analyzes the value of a residence and suggests a reasonable starting offer amount.
- Making deals: understands when to demand a cheaper price and how to work out contingencies and repairs.
- Local knowledge: Realtors has insider knowledge of the community and nearby schools.
- Provides recommendations for a reputable lender, attorney, contractor, or other service provider.
- Experience: streamlines the process by resolving problems, staying on top of deadlines, and keeping track of documents.
Step 5: Start House Hunting and make an offer
Searching for available houses on the internet is a good method to get started on your home search. 88 percent of buyers use online resources in their house hunt, according to a Zillow Group report. Start by searching for homes in your preferred area on Zillow, then narrowing your search by price and must-have features.
Allow yourself as much time as you need to find the perfect house. Then, with the help of your realtor, negotiate a fair offer based on the worth of similar properties in the area. The house will go into escrow once you and the seller have agreed on a price. Escrow is the time it takes to complete the remaining procedures in the home buying process.
Step 6: Get a Home Inspection
According to the Zillow Group Report, 82% of buyers conducted an inspection on a house they were considering purchasing. The easiest approach to verify that the home you’re buying doesn’t have any severe underlying issues is to include an inspection contingency and do a home inspection.
A report on the findings of the home inspector will be sent to both you and the seller. You can next determine whether or not you wish to ask the seller to make any repairs to the property before closing. You will have a walk-through of the home before the sale closes, giving you the opportunity to ensure that any agreed-upon repairs have been executed.
Step 7: Work with a Mortgage Banker to Select Your Loan
Even if you’ve been pre-approved, you’ll need to complete a few more procedures before submitting your mortgage application. If everything checks out, you should get the “clear to close” after completing the next procedures, which signifies the lender has accepted your purchase.
Step 8: Have the Home Appraised
If you’re applying for a house loan, your lender will need an appraisal to determine the property’s value. An appraisal protects you from overpaying for a home by determining its true value. If the appraisal comes back lower than your offer price, your real estate agent will be able to advise you on the best course of action.
The appraiser is hired by a third-party firm and is not affiliated with the lender. The evaluation will inform all parties involved that you are paying a reasonable price for the house.
Step 9: Get a homeowners insurance policy
Before closing, you’ll need proof of a homeowners insurance policy. So if you already own a house, ask your current agent to assist you in getting a new policy. If you don’t own a house, check around for the best insurance policy for you. Your lender may be able to assist you in coordinating a policy that can be paid through your escrow account on a monthly basis.
Step 10: Close the Deal
You will sign all of the papers necessary to complete the transaction, including your loan documents, during closing. After the paperwork is submitted to the lender, it usually takes a few days for your loan to be funded. You’re ready to move into your new house once the cheque is delivered to the seller!
Ready to Start the Home-Buying Process?
If you’re ready to get started on your home purchase, now is the time to find a realtor you can trust! But how can you find a reliable agent? Take a look at the services we can offer you. We’ll be there for you from the beginning to the end of the process.