A Step By Step Look at Home Buying The specific way you progress through a home buying transaction varies depending on the real estate laws and customs where you live, but there are many home buying steps 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're only 11 steps away from buying a home.
Step 1, Get Your Finances in Order Your credit reports are an ongoing look at 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.
Step 2, 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.
Step 3, 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?
Step 4, 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.
Step 5, 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.
Home Buying Search Tools
Step 7, 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.
Step 8, 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.
Step 9, 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.
Step 10, 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.
Step 11, You're on the Way to Closing Most of your home buying problems are behind you now and you're on your way to closing, also called settlement, the event that transfers ownership of the property to you.
Closing Thoughts The steps outlined in this article are a general home buying guide. You will encounter issues specific to your location and your transaction, issues that can best be explained and handled by your local real estate agent, your lender, your attorney, your closing agent, or others who are helping you complete the home buying transaction.
Never hesitate to ask questions. Ask as many questions as necessary to help you understand the entire home buying process. You are making a long term commitment and spending a major amount of money--you'll feel much better about the transaction if you stay informed and understand what's happening every step along the way.
Step 1, Get Your Finances in Order Your credit reports are an ongoing look at 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.
- What's on Your Credit Report and How Did it Get There?
- How To Check Your Credit Report
- Clean Up Your Credit Report
- Understanding Your Credit Scores
- How to Improve Your Credit Scores
Step 2, 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.
- What's the Difference Between a Mortgage Broker and a Bank Loan Officer?
- Understanding Your Debt to Income Ratio
- Should You Choose an Adjustable Rate Mortgage?
- FHA Loan Basics
- VA Home Loan Facts
- Bi-Weekly Mortgage Payment Plans
- Should You Really Buy Discount Points?
- Facts About Private Mortgage Insurance
- Will You Have a Mortgage or a Deed of Trust? Why Does it Matter?
- Watch Out for Loan Fraud
Step 3, 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?
- Pre-Qualification vs. Pre-Approval, Which Do You Need?
- Using Online Mortgage Calculators to Analyze Your Loan Possibilities
Step 4, 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.
- Sort Out Your Wants and You Needs
- Considering Resale Potential
- When You Need Help with Downpayment Funds
Step 5, 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.
- Does Your Agent Work for You?
- How To Work with a Seller's Agent
- What You Should Expect from a Buyer's Agent
- How To Hire a Buyer's Agent
- How a Buyer's Agent Becomes a Dual Agent
- Common Myths About Working with Real Estate Agents
- Your Duties to Your Agent
- Dealing with Incompetent and Unethical People
Home Buying Search Tools
- Consider the Houses that Others Overlook
- It's Time to Find Out What's Out There
- Search Public Versions of Multiple Listing Service Web Sites
- Find Real Estate Agent Web Sites
- Browse Real Estate Search Engines and Networks
- Find For Sale By Owner Properties
- Look at Print Magazines
- Find Foreclosed Homes
Step 7, 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.
- How's the Resale Potential?
- Contract Contingency Basics
- What Kind of House Is It? Site Built, Modular, Manufactured
- Do Others Have a Right to Use the Property?
- Can You Live with the Deed Restrictions?
- Is the Reported Square Footage Accurate?
- Is the Heating System Efficient?
Step 8, 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.
- What Comes With the House? Contract Considerations
- What Should the Seller Disclose?
- Determine if Lead Paint Disclosures Are Required
- Decide How Much to Offer
- Asking for Possession Before Closing
- Special Considerations for For Sale By Owner Purchases
Step 9, 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.
- Order a Full Home Inpsection
- Testing for Radon Gas
- Looking for Molds and Mildew
- Lead Paint Disclosures & Inspections for Pre-1978 Homes
- Is There a Private Well on the Property?
- Understanding and Checking the Septic System
- Tenting to Eradicate Wood Destroying Insects
- Should You Buy a Home Warranty?
Step 10, 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.
- 10 Things You Shouldn't Do When You're Buying a Home
- Get the Facts About Residential Appraisal Methods
- How to Deal with a Low Appraisal
Step 11, You're on the Way to Closing Most of your home buying problems are behind you now and you're on your way to closing, also called settlement, the event that transfers ownership of the property to you.
- Coping with Buyer Remorse
- Get the Facts About Title Insurance
- Learn to Read the HUD-1 Settlement Statement
- Take Your Final Walk-Through
Closing Thoughts The steps outlined in this article are a general home buying guide. You will encounter issues specific to your location and your transaction, issues that can best be explained and handled by your local real estate agent, your lender, your attorney, your closing agent, or others who are helping you complete the home buying transaction.
Never hesitate to ask questions. Ask as many questions as necessary to help you understand the entire home buying process. You are making a long term commitment and spending a major amount of money--you'll feel much better about the transaction if you stay informed and understand what's happening every step along the way.
