Steps to Buying a House | What You Should Know: House Buying Process – Step by Step

Intro: Steps to Buying a House | Step by Step Overview of What You Need to Know about the House Buying Process

For many people, buying a house is a fulfillment of a dream to have a corner of the world they can call their own, but the steps to buying a house can seem daunting.

There is paperwork to fill out, inspections to obtain, and of course qualifying for a mortgage loan is a first step to buying a house. But the whole process can be easier than you think if you break it down in to the main steps to take to buy a house and take each one by one.

In this ultimate step by step guide to buying a house, we will take you through each of the buying a house steps and explain why each is important.

With some planning and understanding of the process ahead of time, you can have a much better experience and make it through the steps for buying a house with flying colors.

To begin, we’ll provide an overview of the whole process and then break down each of the steps of buying a house one by one.

Steps to Buying a House Overview

Don’t let the various house buying steps scare you; each is important, and each one from the first step in buying a house to the last makes the process easy. The goal is to know what to expect, plan ahead, and take the steps for buying a house in the right order.

Image source: Bigstock

The main steps of buying a house are:

Check your credit and finances
Choose a lender and get pre-approved for a loan
Research the area and market prices
Find a great real estate agent
Shop for your home
Make an offer
Get a home inspection & termite letter
Finalize the loan with your lender
Schedule the closing
Plan your move

Next, let’s take a look at each of these steps for buying house in more detail and take you through the process so you’ll know exactly what to do and what to expect as you go through each of the buying a house steps yourself.

Steps to Buying a House #1: Check your credit and finances.

While you may just want to jump right into the fun part and start looking at homes right away, this first step to buying a house is vital if you don’t want to risk being disappointed. It’s no fun to start looking at homes, pick one you love, then find out your credit rating isn’t what you thought and you can’t qualify for the type of loan you want.

Start this first step in buying a house by requesting a free credit report. The main three credit reporting agencies, Equifax, Experian, and TransUnion, are federally mandated to provide you with a free credit report annually. Be careful not to be fooled by any websites that request your credit card for this. The reports are completely free and the official site to request these is annualcreditreport.com.

The reason this first step to buying a house is so important is that you may need some time to improve your credit score or save up for a down payment. The better your FICO score, the more options you have for a loan. You also want to do a reality check on your finances and review how much you have for a down payment and how much you can afford to pay per month for a mortgage.

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Steps for Buying a House #2: Choose a lender and get pre-approved for a loan.

You may be wondering when you can get past the financial steps to buying a house and get to the good part? While these money related steps to take to buy a house might not be as exciting as the house hunting part, making sure your finances and loan approval is in order first ensures that you won’t waste time looking for a home outside your price range, and you may be pleasantly surprised to find you can afford more house than you thought.

Once you’ve taken the first step in buying a house, the second one is to choose your lender and get pre-approved for a particular loan amount. Shop around for the best rates and type of loan (FHA, VA, etc.) by checking out the bank you do business with regularly as well as other lender options.

Steps to Buying a House #3: Research the area and market prices

Once you’ve completed the first two steps for buying a house, you should be in excellent shape to begin your initial “window shopping” and research for where you want to buy your home. There are several things you’ll want to investigate ahead of time before you get to the steps to buying a house that include visiting the homes in person.

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You’ll want to do the following research to narrow down exactly where you’ll want to live:

Review the neighborhoods either by driving by or using Google street view.
Research the schools and how they’re rated, even if you don’t have children.
Find out what type of public transportation or services are nearby.
Research the median home values and cost of living in the area.
Review the taxes applicable in the state and municipality.
Find out how close your favorite activities are (gyms, museums, movies, hiking trails, etc.).

Steps for Buying a House #4: Find a great real estate agent.

Now, you’re nearing the real shopping part of the house buying steps, and to have the best shopping experience, you want a great real estate agent. The right real estate agent will take you to homes within your price range and be mindful of things that are important to you, like having parks nearby or great schools for children.

This is one of the most important steps to buying a house because the right real estate agent is your advocate during the home buying process and can also help you go through some of the paperwork and inspection steps of buying a house if you live out of state.

Ask friends and family for agent referrals, and you can also check out Realtor.com, Zillow, and Redfin.

Steps to Buying a House #5: Shop for your home.

If you’ve followed the steps to take to buy a house up to this point, then this step is going to be much more enjoyable and less time consuming, because you already prequalified for a loan, how much you can afford, and what areas you like. When your real estate agent is showing you around, you can focus on a neighborhood that you want to be in and a price range you can afford.

When shopping for a home, just remember to take your time and review all your options in the areas that you’ve identified from the house buying steps that you’ve taken up to now. You’ll find that those steps have helped save you considerable time because every house you see will be within your mapped out target area.

Image source: Bigstock

Steps for Buying a House #6: Make an offer.

Once you’ve identified a new dream home that checks all the boxes you identified in the previous steps to buying a house, you’re ready to make an offer. Your real estate agent can often provide advice on what to offer, but a good place to start is about five percent below the asking price. You don’t want to risk going too low and losing your dream house to another buyer, but you also want to do a little negotiating. Referencing how much comparable homes have sold for will also give you a good base for your offer.

Items that can factor into the offer besides just the asking price:

Any major appliances that you may like to keep, like the refrigerator or dishwasher.
New carpeting or roofing being installed before you take ownership.
Asking the seller to pay a portion of the closing costs.
Outside structures like free-standing storage buildings that you’d like.

The offer is a negotiation, but you don’t want to go back and forth too much during these buying a house steps, so using the experience and advice of your real estate agent here will help you a great deal.

Steps to Buying a House #7: Get a home inspection and termite letter.

This is another of those steps for buying a house that may seem a bit more tedious, but a home inspection and termite letter are pretty much a necessity for both your lender and home insurance provider. This is another area where your real estate agent can provide a reference.

The Home Inspector will look in every nook and cranny of the home to ensure there are no hidden issues. They typically will review the following:

Structural components
Exterior faults
Roofing
Plumbing
Electrical
Heating/air conditioning
Insulation/ventilation
Interiors/appliances

You can find a certified ASHI home inspector at www.homeinspector.org.

Steps for Buying a House #8: Finalize the loan with your lender.

Once you’ve made it past all the other steps for buying a house and your offer has been accepted by the seller, you want to go back to the lender that you pre-qualified a loan with to finalize the loan that you’ll need for the home purchase.

It’s at this time that you can review any final details on interest rate, or whether you plan to go with an adjustable-rate or fixed-rate mortgage. If you’ve done the steps to buying a house #1 and #2 up front, then this step will be a piece of cake. You can typically take care of it in just one office visit or phone call.

Steps to Buying a House #9: Schedule the closing.

This part of the steps for buying a house is coordinated with the date that you actually plan to take ownership or when you plan to move. You also have to time it with when the seller plans to move. Usually, you will need several weeks out from when the actual agreement to purchase is done, as each family usually needs some time to pack up and move.

The closing is typically held at the office of an attorney, and it is when you will sign the final loan documentation and when you will need to pay any closing costs that are due. The seller does not always have to be present. If you’ve taken both the first step to buying a house as well as the last one, then there should be no surprises as far as costs and monies due at the closing.

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Steps for Buying a House #10: Plan your move.

While some people may think the steps to buying a house end with the closing and taking ownership, anyone that has ever moved knows that a lot goes into a smooth and successful move into your new home. No step by step guide to buying a house would be complete without some tips on a smooth transition.

Tips for a smooth move to your new home:

Contact all the utilities for both your current and future home two weeks prior to your move date to schedule them to be turned off or on (power, water, garbage collection, cable, phone, etc.).
Submit a change of address with the U.S. Postal Service.
Research moving companies and price all options, from do-it-yourself (U-Haul, Penske), to pickup/drop off pod options (PODS, SmartBox), to full-service moving companies (AtlasVanLines, Mayflower).
Contact your local schools if you need to register your children.
Find out where the local DMV is if you need to get a new driver’s license in the state.
Review the local newspaper for job opportunities if you or a spouse is planning to get a new job once you move.

Conclusion – Steps for Buying a House

While it may at first seem a bit daunting to go through the steps to buying a house, if you do the financial steps up front, the later steps where you’re actually looking at your potential dream homes will be much more efficient and you won’t have any unexpected surprises. Our step by step guide to buying a house is meant to make the process as painless as possible and ensure your success.

Planning and preparation are the key steps for buying a house to ensure a smooth process during what should be one of the most exciting and enjoyable times in your life. If you follow these steps to buying a house diligently and in order, then the whole process should go more smoothly and be a positive one for you and your family.

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