Buying a house is a major decision and takes a lot of time and commitment. Check out these 10 steps to buying a house and gather a better understanding of the process.
This post was inspired by my FREE HOME BUYER GUIDE. In 2021 I began a mission to educate individuals on the home buying process including how to prepare their finances for home ownership as well as the actual steps to buying a house that you will follow. My goal is to help 500 women obtain homeownership. If you are planning on purchasing a home and looking for an accountability team join my Goal Diggin Community.
Far too often we only focus on Credit when prepare to purchase a home. That is simply not enough.
Step 1: Research, Research, Research
As soon as possible locate credible websites, Youtube videos. Make profiles on real estate sites like Realtor and Trulia. The purpose in doing this is you want to learn more about the process and gather information about different loan products so that you can be an educated buyer. Use the real estate sites to set searches up so that you can begin a list of your wants and needs in your new home. Homes that meet your needs mark as favorites. Now, pay attention to taxes, asking prices, how long home stays on the market. This will give you a sense of the housing trends in specific areas.
Step 2: Get Prequalified and Preapproved
Don’t start looking for a home just yet. The best thing to do that is to get prequalified for a mortgage. Speak to a professional mortgage banker/broker to get prequalified, you by providing your current income, savings, and investments. They usually review this information and tell you how much we can lend you. Lenders generally recommend that people look for homes that cost no more than three to five times their annual income. Preapproval involves providing your financial documents (W-2 statements, paycheck stubs, bank account statements, etc.) so your lender can verify your financial status and credit. If you have my Home Buyer Success Kit then you are already locked and loaded for preapproval.
If you are not preapproved the lender will usually give you a game plan to map what your next steps. That’s where I come in. I have several tools via online classes available to help you achieve home ownership. Any purchases grants access to a private community to receive direct access to me.
Step 3:Determine How Much House You Can Afford
Once your lender has issued a pre approval it’s usually based on your current financials. Don’t set what the lender approves you for as a goal, sit down and create a budget and determine how much you can comfortably afford. Consider your current monthly financial obligations and how comfortable you are with them. Discuss with your lender how much how that is based on the interest rate.
To help you save for your down payment, your get started with my video “7 Expensive Money Habits“, which makes it easy to put aside money each month.
Step 4: Find A Real Estate Agent
Now let’s talk about your A team. It’s great that you have people you know in the industry but you want to make sure that your A team has your best interest at heart. Your real estate is like your partner in progress during this transaction. At times they will play the role of your agent, negotiator, spokesperson, and guidance counselor. Their knowledge of the home buying process, negotiating skills, and familiarity with the area you want to purchase in are extremely valuable. It’s also good to know that your agent’s commission is paid by the seller.
Step 5: Let’s Go Shopping!
Once you start touring homes, I usually suggest that you make a list of home wants and needs. At this point you have been looking at a lot of homes online and you are getting a great idea if the home you want is in your price range. Take notes all the homes you visited. What you like, what you don’t. Things like that. Trust me on this as you will see a lot of houses! Also be patient sometimes it might take a while but remember what is meant for you belongs to you so no need to rush or feel defeated.
Just a few home shopping tips:
- Test the plumbing by running the shower and tub at the same time to see how strong the water pressure is and how long it takes to get hot water
- Try the electrical system by turning switches on and off
- Open and close the windows and doors to see if they work properly
Don’t forget to consider the neighborhood also:
- Is the neighborhood maintained well?
- Is there a lot of traffic on the street?
- How is the parking situation?
- How would you get to work from this location? family and friends?
Once you found your home then work with the real estate agent to determine an offer. Remember that it is a possibility that the seller might counter or decline. Also remember the price is an asking price so it is not set in stone. Once the seller accepts your offer and the purchase agreement is signed You will now go into escrow.
Step 6: Get Home Inspection
When you place an offer on the property and subsequently the seller agrees to it. Typically, purchase offers have contingencies like allowing a certain amount of days to complete an inspection of the property. The purpose of the inspection is to check for signs of structural damage or things that may need fixing.
The contingency is a layer of protection as if the home fails inspection you have the right to back out of the deal. The inspection also give you power to renegotiate your offer and add a repair amendment to the agreement requesting certain damages be repaired . There will be a final walkthrough before closing in which you can verify the homes final condition for sitting down at the closing table. This gives an opportunity to confirm that any agreed-upon repairs have been made.
Step 7: Work with Your Mortgage Banker to Choose Your Loan
This is where the research will continue to pay off. Banks have a plethora of loan programs and competitively priced loans. It’s important to understand what terms you need. For would you prefer a fixed rate or an adjustable rate mortgage?
Maybe your priority is keeping your monthly payments as low as possible. It’s best to be knowledge about your loan terms because they may be in affect for 30 years. Consider when you plan to be moving again. Whatever option you choose be sure to create a debt repayment plan to set a time period to have it paid off.
Step 8: The Bank Will Have the Home Appraised
Typical the lenders will have the appraisal conducted. An appraisal is an estimate of the value of the house. The appraiser is a third party and does not work for the bank. If the appraisal comes back under the value you are paying the bank will not fund that loan. Your option will be to either walk away, ask the seller to lower the price, or bridge the gap with your funds.
Step 9: Underwriting
Now by this part of the process you are a combination of frustrated and anxious at the same time. Please report back to this post and let me know if I’m wrong. There is sooo much paperwork involved in the final steps to buying a house, especially during the underwriting process. Please be sure to update statements and paycheck stubs every 30 days. A title company will be selected usually by the seller and they will handle a lot of the paperwork to prepare for closing. Title company usually will verify the title is free and clear and the seller is the proper owner.
During this phase you will write explanations and provide additional documents. Please respond as quickly as possible. A delay in response will delay your transaction.
Step 10: Close the Sale
Get ready to sign your life away. You usually will be notified at least 3 days before closing. At this point you will agree to the loan terms and find out how much money you need to bring with you to the closing. The title company will let you know if you should be submitting the funds electronically or via check. You will receive copies listing all the paperwork and identifying everything you agreed with the seller and the lender.
You are now ready to move into your new home!!!
Still feeling overwhelmed…??? Get your Free Home Buyer Guide HERE