Pre approval to Closing - 10 Steps of Buying a Home

Being able to afford a home is considered a financial win and directly reflects your responsible credit history. However, buying a home is not as simple. Real estate transactions are rampant with technical terms, insights, and market knowledge that an average home buyer does not have. Without a proper plan, a home buyer might face delays and additional costs they did not budget. Moreover, with a hefty investment on the line and a tough buying market, home buying can be stressful and challenging to navigate, especially if you are a first-time home buyer.

Hence, one way to ensure a smooth home-buying experience is by following the home-buying process, which comprises essential steps to buying a home. Home-buying begins with setting criteria for your ideal house, assessing if you can afford to buy such a home, searching for your dream home, usually with the help of a buyer's agent, and finally closing on a home with a fair deal.

These steps will help underscore the importance of planning and assessment and betray the total home cost. The process becomes more manageable once the steps to buying a home are listed. Let's see how:

Find out More: Check out the listings on the map

At a Glance: The Steps to Buying a Home

The home buying process is a guide that can be personalized based on an individual's location and unique circumstances. However, the fundamental steps to buying a home remain more or less the same:

Step 1: Plan Out Before It Pans Out

As the first step, planning forms the foundation of your house-buying journey. It provides a blueprint of your wants and needs and forces you to have foresight. During planning, you must ask yourself all the non-financial questions and assess your emotional readiness for home ownership.

For example, understanding the intention behind buying a home can save you from many losses down the road. In the case of long-term investment, remember that appreciation of land happens over a few years. Also, you should pay special attention to factors that will ensure maximum returns on your house investment, for example, the location of the home and the market standing.

Moreover, at this stage, also identify if there can be any changes in the family size shortly after the purchase since this can directly influence the size of the home you are looking for. Consequently, you will need the necessary funds to afford the size.

At the planning stage, once you factor in your unique circumstances, you can choose the type of property you want to buy.

Types of Home:

1. Condominiums
2. Townhouses
3. Apartment
4. Single Family House
5. Semi-Detached Homes
6. Cooperatives

In short, some of the important non-financial questions you must ask yourself are:

• Are you going to be the sole owner of the house?
• Will this be your long-term residence?
• How important is the neighborhood in making the final choice for your house?

Once you have assessed your vision for your future home, let's move on to the next step, which will confirm if you have the funds to afford this vision or if you need to wait a little longer.

Step 2: Conduct a Thorough Financial Assessment

This step entails establishing your budget. It necessitates carefully assessing your finances and computing how much you can spend on a home. Your expenses matter because some of the housing loans must be returned monthly. If you are already struggling with paying rent and managing utilities, you should especially go for a thorough analysis of your finances.

The accurate picture of the minimum funds necessary to buy a home comes from factoring in expenses, debts, and income. A debt-to-income ratio that is low is usually considered a green signal. For a complete financial assessment, the following should be considered:

• Down Payment Plan
• Mortgage Plan
• Credit History

Learn More: Calculate Your Monthly Mortgage

Step 3: Get Pre-Approved

Obtaining pre-approval for a mortgage is another essential step to buying a house. Some lenders may even require you to have pre-approval before they can offer you any loan. A lender determines the amount you can borrow and the corresponding monthly payments you must make once you close on a home.

The lender assesses your assets, income, and credit history to give you a pre-approval. Good credit history reflects responsible financial transactions. Hence, maintaining a higher credit score is considered one of the prerequisites for buying a home.

The pre-approval for a mortgage gives a good impression to the lender but is also a cogent indicator of your financial standing.

Step 4: Plan for Down Payment

After pre-approval, you know which mortgage plan you qualify for, the interest rates, monthly payments, and the percentage down payment that must be made on closing. A down payment plan is crucial in the steps to buying a home. The down payment will be the first "big" payment you will make in the home-buying process.

The mortgage pre-approval gives you a rough idea of where and how big of a home you can afford. Hence the down payment plan can be made even before finding your home.

Step 5: Hire a Real Estate Agent

Among the steps to buying a home, the fifth one necessitates the selection of a real estate agent or a buyer's agent. Real estate agents will be the most valuable among the people you will meet on your journey to buying a home.

A real estate agent can prove invaluable, from hunting for your ideal home to negotiating and closing the deal. A proficient agent with ample local market knowledge and experience working with buyers within your financial range is ideal.

Learn More: Find a Real Estate Expert

Step 6: Start the Home Hunt

You now have the vision of your home, the finances, and even the person who will help you reach there. Step six in the home buying process encompasses the commencement of your search. Your real estate agent can furnish residences that meet your criteria and facilitate viewings.

Home hunting might be the longest part of the home-buying process. It may take months before you find something you like. Consider conducting a rough inspection of the fixtures and fittings of the houses that click. Initial assessment will help eliminate any homes that have structural or irreparable issues. Additionally, you can request the seller to cater to these concerns when you make an offer.

Learn More: Check out a Property For Sale Near You

Step 7: Make an Offer and Negotiate if Necessary

After carefully considering the right home, make an offer. Negotiating a deal on the home is another central stage in the steps to buying a home. Your agent can assist in preparing a proposal that includes your offer on the house, including the negotiations, the closing date, and any contingencies to protect your money. The seller can accept your offer, make a counteroffer, or reject it.

In case of a counteroffer, your agent can confirm whether it is a fair ask. You can negotiate further to reach an offer you and the seller can accept.

Step 8: Inspect and Appraise

A thorough inspection and appraisal are of utmost importance in the home-buying process.

Inspection can be carried out by a professional who can report any substantial damages that the home is facing or will likely face, such as structural, plumbing, or electrical problems. A home inspection can reveal the repairs required by the property.

If you wonder whether the seller has asked for a fair price, an appraisal can confirm the home's worth. You may need to negotiate with the seller or rescind the deal based on the inspection and appraisal reports.

Learn More: Hire Experienced Home Inspectors Today

Step 9: Close the Deal

When completely satisfied with the inspection and appraisal or the negotiation in the offer, this step to buying a home entails closing the deal. This involves executing the requisite paperwork and paying the closing costs, including attorney, appraisal, and title fees.

Keeping these costs as savings from the beginning is a good idea.

Step 10: Move In

The ultimate step to buying a home is to relocate and relish your new abode, which is fun but also exacting on the mind and the body. It is essential to ensure that utilities are set up, your address is updated, and all the construction, repairs, and updates are finalized before shifting.

The steps to buying a home entail every little detail you need to stay motivated on your journey to home ownership. As you lay out a plan, and assess your financial health, one of the most critical role players in the process is the real estate agents who can make or break your home-buying experience. You can find a real estate agent at HAR.com to get you started with your home-buying process.