The home buying process can be quite stressful and overwhelming. People who have bought houses in the past also need help to make the right decisions. Therefore, it’s normal to feel like a fish out of water when navigating the steps to buying a house.
You must understand every step of the home buying process if you want to purchase the home of your dreams. Open house visits are just one part of this process.
The fundamental procedures for home buying are the same regardless of the kind of home you want or where you want to buy. So without further ado, let’s get started.
What to Consider Before Buying a House?
Buying your first home can be an equally exciting and terrifying process. Before starting the home buying process, you must consider some crucial factors.
Considering these factors, you’ll find it easier to make the best decisions for your family and finances. These factors are:
- Where do you want to buy the house?
- Safety of the neighborhood
- Is the neighborhood fit for you & your family?
- Which type of house do you want to buy?
- How much can you spend on the house?
- Will you take out a home loan?
- Are you eligible for a home loan?
- How much can you pay as a down payment?
- House prices in your desired neighborhood
Home Buying Process: A Step-by-step Guide
Check your credit score
Your credit score determines your financing options: interest rate, total interest, and monthly payments. In addition, mortgage lenders check your credit score to decide how much loan you’d be given.
A better credit history will boost your chances of financing with the best rates and terms. Check the credit score and resolve if there are any discrepancies before starting the home buying process.
Make a house-building budget
Create a realistic budget to complete all the steps to buying a house. This will allow you to understand what you can and can not afford.
Also, determine how much loan you can qualify for, how much you can put down as a down payment, and for a maintenance fund. Finally, consider if your monthly income can cover the mortgage rates and daily necessities.
Save up for the down payment
First, research how much down payment you’ll have to pay for the loan you want. If you want to avoid PMI, save up at least 20% of the total home purchase price for a down payment.
Can not save up this much for a down payment? Look up government-backed loans like FHA, VA, and USDA loans.
Get your mortgage pre-approved
Look up expert mortgage lenders in your area. Talk with three mortgage brokers to ensure you get the lowest interest rate possible.
Get the mortgage pre-approved. This will help you to make an offer on the house you love immediately.
Hire a real estate agent
Hiring an expert real estate agent can make the home buying process convenient and efficient. Experienced real estate agents will be able to get you the best deal on houses.
So, please find out about the real estate agent you’re considering before hiring them. Check their track record, expertise in your neighborhood, and availability.
Start the home search
Tell your real estate agent what type of homes you are looking for. Then, drive through neighborhoods you are interested in and look up houses online.
Note what you like and don’t like about each property you visit. These notes will help you make the decision later on. Also, tour open houses in the area to see if something piques your interest.
Make an offer on the home
Once you are sure you want to buy a house, make an offer. Creating an attractive offer will take you further in your home buying process.
Your real estate agent will help you create the offer package, including details like the offer price, preapproval letter, and proof of funds.
Schedule house inspection
After the home sellers accept your offer, you need to schedule a house inspection.
A home inspection helps you get an overall picture of the property’s mechanical and structural issues. Then, you may have to ask the seller for repairs or decide to back out of the deal if you have a contingency in the contract.
Secure your finances
You’ll need to receive final loan approval to finalize the home buying process. Ensure all your credit information aligns with the lender’s requirements. Provide all necessary documents promptly and wait to make significant financial decisions before the purchase.
Close the offer
You’ve got the loan approval. Now, you can close the offer on the house. But remember to check the closing disclosure and contingency clauses carefully.
On closing day, review all the documents you sign carefully, and ask for clarification on anything you don’t understand. Ensure that you have received all house keys and entry codes.
Once the paperwork has been signed, the home is officially yours, and you’ll get those house keys.
Conclusion
The home buying process involves a lot of complex steps. But this in-depth guide has broken down the phases so that you get a clear insight into each step.
If you’re new in the home buying process, take help from professional real estate agents. Do your research before beginning this journey. Once you get everything lined up, buying your coveted house will become much more manageable.
FAQs About Home Buying Process
What is a suitable credit score for a home purchase?
There is no direct answer to this. However, having a credit score above 700 is preferable. You’ll need a score of 620 minimum to get approved for most home loans.
How much should I bid on a house?
Your offer amount will depend heavily on the local real estate market.
Make sure to leave room for negotiations. Your real estate agent will help you put down a competitive yet fair offer.
Is hiring a real estate agent mandatory?
No, hiring a real estate agent is not mandatory. But if you don’t have any experience in the home buying process, it is advised that you hire one.
Working with an experienced real estate agent can help you get the best home with the least possible hassles.
