Many people dream of buying a house for years—or even decades—before they actually begin the process. You may have considered how many bedrooms you want, what your neighborhood should be like, and what lawn gnome you’ll have in your front garden.
However, there’s more to a home purchase than picking your favorite listing and moving in. It’s important to understand all the steps of buying a house, as well as what to look for when buying, what questions to ask, understand the hidden costs, and how to close on it.
But you don’t want to make any hasty decisions when buying a house, especially your first one. So let’s walk through the process with you to help get you into your dream home, responsibly.
Steps to buying a house
Before you can close on your dream home, you must understand the steps to buying a house. Navigating the home-buying process can be challenging, but it becomes much easier if you have a plan and a clear path forward.
Here are the critical steps you must take as you’re considering this major life step.
1. Take stock of your personal finances
You won’t be able to buy a home until you know what you can afford based on your personal finances. Be sure to keep track of your credit score and try to improve it as much as you can.
The better your score is, the easier it will be for you to get approved for a loan. You should also determine how much you have saved up for a down payment. Generally, home buyers are expected to put up between 3.5 and 20 percent of the price of a property as a down payment.
2. Research the local market
Long before you actually put an offer on a home, you should be monitoring the condition of the market in the area where you will be buying. Pay special attention to the length of time that most homes in your price range stay on the market and if there are any big shifts in the asking price.
Partnering with any local realtor can help you understand these key data points.
3. Go through the pre-approval process
You might be able to guess what your house budget is based on your finances and credit score, but speaking with a lender will help you determine a specific number. You can check out the best lenders in your area here!
In order to get pre-approved for a mortgage, you will have to provide your lender with some financial information, including your debts and assets.
4. List your priorities
Once you know how much house you can actually afford, you can actually begin your search for a home among listings in your area of choice. Although you probably won’t be able to find a listing that fulfills every item on your wish list.
5. Find an agent
With your list of priorities and your pre-approval information in hand, speak to a real estate agent who can help you find a home. An agent can facilitate negotiations between buyers and sellers and show you properties that fit your budget and meet your needs.
6. Make an offer and negotiate
With the help of your real estate agent, you will determine a fair price to offer the owners of a home in which you are interested. Try to avoid making a low-ball offer. Often, owners who receive an offer that is obviously too low simply refuse it upfront and don’t engage in any further negotiations.
You should always defer to the opinion of your agent, as he or she will know a lot more about the housing market and the rules that apply to home offers.
7. Handle inspections and secure a loan
Home inspections are a necessary part of the homebuying process. Don’t skip this. It’s important to have the house you are purchasing professionally inspected to ensure you are aware of any damage or signs of structural wear.
An inspection will confirm whether the homeowners were honest in their listing and reveal any issues that might have gone unnoticed. After the inspection and the appraisal of the property, you can secure your loan with a bank or lender.
8. Submit paperwork and close
You will work with your lender and your real estate agent to ensure that all of the relevant paperwork for your purchase is in order. You will be able to move into your new home as soon as all of the paperwork has been completed and the seller of the house has been paid.
What to look for when buying a house
When you begin touring homes with your real estate agent, you may be focused on the size of the yard or the square footage of the kitchen, but there are other attributes to a home that are even more important to consider.
You’ll want to be certain that you are making a good investment when you purchase a home, so you should avoid those with major problems or that will need costly repairs shortly after you make your purchase.
You should know which things to look for when buying a house to ensure that you are making a good investment. Here are a few items you and your home inspector must watch for:
1. Roof condition
A traditional shingle roof will have to be replaced every 20 to 25 years—and a full professional replacement may cost $8,000 or more. This is a significant expense, and not one you want to be stuck with right after purchasing your new home. Pay attention to the condition of the roof when you tour a home, and be sure to ask about its age.
2. Signs of foundational damage
Some small problems, like faded paint or a broken light fixture, can usually be remedied without too much effort and money, but if the foundation of a home is damaged, you are looking at thousands of dollars in repairs. Look for signs of cracking near the foundation inside and outside the home and pay attention to the grade of the floors for signs of unevenness, which may indicate a sinking of the foundation.
3. Potential for flooding
You might fall in love with a home you tour because of how close it is to a body of water, but make sure you consider the potential risks of this proximity. The closer you are to water, the more likely it is that you will experience problems with flooding—especially during stormy times of the year. It is also important you have insurance coverage for such a possibility, so be sure to do your research.
4. Mold, weathering and water damage
Take a peek inside the cabinetry for signs of mold growth around pipes. Mold growth may indicate a leaky plumbing system, previous flooding or improper ventilation. You should also look for other signs of water damage and excessive weathering, such as musty odors or peeling paint.
5. Insulation and energy efficiency
Make sure you are aware of the condition of the insulation in a home, especially if it was built several decades ago. The better the insulation of a house is, the less you will have to spend on utility costs when it comes to heating and cooling throughout the year.