Based on the size of the investment, the intricacy of legal documents and the potential for second-guessing, buying a house is one of the most intimidating decisions most of us will ever face. With so many moving parts and the amount of technical knowledge involved, how can anyone be expected to make the right call?
To borrow a popular expression, buying a house is like eating an elephant: take it one bite at a time. Plan your strategy with this practical list that demystifies the steps of the homebuying process.
- Put Your Financial Ducks in a Row
Knowing what you can comfortably afford removes a lot of the guesswork. Take a clear-eyed look at your savings, budget and credit score. If any element isn’t where it needs to be, take steps to correct it. - Get Pre-Qualified and Pre-Approved
Pre-qualification is a ballpark estimate of how much money you could potentially borrow, calculated off of general information you provide. When you get a little further into the buying process, a lender will use verified documentation to provide pre-approval for a specific amount. While you will still need to complete a mortgage application, pre-approval signals your status as a motivated buyer and demonstrates your financial worthiness. - Do Your Homework
Once you’ve established a price range you can afford and what features and amenities you’re looking for, study real estate listings in your preferred area. See if your wish list is realistic according to current asking prices. Pay attention to fluctuations and how long homes remain on the market. - Find a Dependable Real Estate Agent
DIY is great when you’re remodeling or upgrading your home, but when you’re actually buying a house? Not so much. An experienced and knowledgeable real estate agent is worth their weight in gold in terms of the time and money they save you. And the fee is paid by the seller, so you have everything to gain and nothing to lose. - Start Looking in Earnest
Now that you have your price range and neighborhood dialed in, it’s time to get serious. Huddle up with your real estate agent to find listings that fit your criteria and make some in-person visits. - Make an Offer
This can be one of the scarier steps in the process, but one where your real estate agent is truly invaluable. What contingencies does the offer need to cover? Do you offer the asking price or take a chance on a lower bid? Your agent can help answer all these questions and more. - Schedule a Home Inspection
You have no doubt looked in closets, turned faucets and light switches off and on and made sure doors open and close. A formal home inspection goes deeper into structural and technical issues that affect the saleability of the house. Depending on the results, you may choose to negotiate for repairs or a reduction in the sale price. - Apply for a Mortgage
Conventional, FHA, adjustable rate. There is a wide array of elements that go into a mortgage. A good mortgage lender will help you sort them out and find the type of loan that best meets your needs. - Obtain an Appraisal
The lender will arrange for a third-party appraisal to confirm that they’re financing you for a fair price. - Close the Sale
Limber up your wrists. Purchasing documents still require a live signature, so be prepared to do a lot of writing.
And just like that, the elephant is gone. When you follow these steps, buying a house becomes a lot less overwhelming and a lot more fulfilling.
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