How to Buy a House in 10 Steps
Buying a house is one of the most important decisions you will ever make. It can be exciting, stressful, and overwhelming at the same time. But with some planning and preparation, you can make the process smoother and more enjoyable. Here are 10 steps to guide you through buying a house.
- Check your credit score. Your credit score is a key factor in determining your eligibility and interest rate for a mortgage loan. You can get a free copy of your credit report from each of the three major credit bureaus once a year at annualcreditreport.com. Review your report for any errors and dispute them if necessary. Aim for a score of at least 620 to qualify for most conventional loans.
- Figure out how much house you can afford. Before you start looking at homes, you need to have a realistic idea of how much you can spend. A general rule of thumb is to spend no more than 28% of your gross monthly income on housing expenses, including mortgage payments, property taxes, insurance, and homeowners association fees. You can use online calculators like Zillow’s affordability calculator to estimate how much you can borrow based on your income, debt, and savings.
- Find a real estate agent. A real estate agent can help you find homes that match your criteria, negotiate with sellers, and guide you through the paperwork and closing process. Look for an agent who has experience working with buyers in your area, who listens to your needs and preferences, and who communicates well and responds quickly. You can ask for referrals from friends, family, or coworkers, or search online for agents with good reviews and ratings.
- Get pre-approved. Getting pre-approved for a mortgage loan means that a lender has verified your income, assets, credit, and debt, and has agreed to lend you a certain amount of money at a specific interest rate. Getting pre-approved shows sellers that you are serious and ready to buy, and gives you an edge over other buyers who may not have financing lined up. To get pre-approved, you will need to provide documents such as pay stubs, bank statements, tax returns, and proof of identity to the lender.
- Start the home search. Searching available homes online is a great way to start your house-hunting process. According to the Zillow Group Report, 95% of buyers use online resources in their home search. Start on Zillow and search for homes in your target area, then filter by price and your must-haves. You can also use Zillow’s map feature to explore neighborhoods, schools, amenities, and market trends. Once you have a list of homes that interest you, contact your agent to schedule showings.
- Make an offer. When you find a home that you love and can afford, it’s time to make an offer. Your agent will help you prepare an offer letter that includes the price you are willing to pay, the terms and conditions of the sale, and any contingencies or requests that you have. Contingencies are conditions that must be met before the sale can go through, such as getting an inspection, appraisal, or financing approval. Your agent will submit your offer to the seller’s agent and negotiate on your behalf until you reach an agreement or move on to another home.
- Schedule the inspection. Once your offer is accepted, you will need to schedule a home inspection within a few days. A home inspection is a visual examination of the physical structure and systems of the home by a licensed professional. The inspector will check for any defects or issues that may affect the safety or value of the home, such as structural problems, faulty wiring, plumbing leaks, mold, pests, etc. The inspector will provide you with a detailed report of their findings and recommendations for repairs or improvements. You can use this report to request that the seller fix or pay for any major issues before closing, or to renegotiate or cancel the contract if the issues are too severe.
- Secure your financing. After the inspection is done and any contingencies are cleared, you will need to finalize your mortgage loan with