The Home Buying Process

10 Essential Steps to Buying a House

Simplifying Home Buying

We know that purchasing a home is one of the biggest and most important financial decisions you will ever make. That's why we created this checklist of 10 essential steps to buying a home.

Scroll down to read our 10 steps that will simplify the home buying process and help ensure that you are prepared for every stage of your journey as a homebuyer.

Call 1.888.546.2634 to speak to a knowledgeable Mortgage Consultant who will find a home loan solution that is just right for you.

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1. Set Your Budget

Before you start shopping for a home, you must determine your budget. As a general rule, your total monthly home payments shouldn't exceed 36% of your gross monthly income. For example, if your total gross monthly income is $5,000, your monthly housing payments - including the principal and interest on your mortgage, taxes, and homeowner's insurance -
should not exceed $1,800 (36% of $5,000).

Be sure to review the remainder of your monthly obligations as well, including car payments, credit card payments, and other bills. You should aim to keep all monthly obligations to less than 45% of your gross monthly income.

2. Gather Your Cash

Now it’s time to gather your cash so you know how much you can put towards a down payment. Depending on the type of home loan you choose, you will be required to make a down payment ranging between 3.5% and 20% of the price of the home. (One notable exception is a that requires no down payment.)

Please note that if your down payment is less than 20%, you will have to pay for private mortgage insurance, which adds an additional 0.5% of the total loan amount to your mortgage payments.

3. Get a Mortgage Pre-approval

It’s important to know how much of a home loan you qualify for and before you start house-hunting. Getting a mortgage pre-approval will allow you to shop for a home with confidence and may add negotiating power to your offer. Once you find a home, our loan specialists will guide you through the rest of the .

4. Find a Real Estate Agent

While most homes are sold through real estate agents, it’s important to understand that the seller's agent works for the seller, not for you. We recommended that you hire your own buyer’s agent to represent you during the home buying process, one who will work to secure the best deal for you. In most cases, such an agent will not charge you a direct fee, but instead will split the commission that the seller’s agent receives upon sale of the home.

5. Search for the Ideal Home

Now that you’re ready to search for a home, you will find that the old adage "location, location, location" is actually true. Location should play a crucial role in . Look for homes in neighborhoods that are a reasonable distance from your regular commutes. The quality of school districts may be an important consideration even if you don't have children as it can affect resale value. You may also want to consider the home's proximity to your place of work, shopping, entertainment, and family and friends.

6. Make an Offer

Once you find the house you want, work with your real estate agent to quickly determine an initial offer and make your bid. A good real estate agent will research recently sold homes in the neighborhood and evaluate market trends to recommend a competitive offer.

7. Review the Contract and Sign on the Dotted Line

Once you’ve reached a deal, have your lawyer or real estate agent review the contract to make sure the deal is contingent upon your obtaining a mortgage, a home inspection that shows no significant defects, and a guaranteed walk-through inspection, by you, 24 hours before closing.

You may also need to make a good faith deposit of 1% to 10% of the purchase price into an escrow account. The seller will receive that money only after the deal has closed. If the deal falls through due to a contingency clause, you will get those funds back.

8. Obtain Your Home Loan

It is a fairly simple process to finalize your home financing and lock in your home loan if you have received mortgage pre-approval. If you have not been pre-approved, speak to one of our Mortgage Consultants to discuss your home financing situation. We are here to ensure that you have a mortgage loan that is tailored specifically to your home-purchasing needs.

9. Get an Inspection

Inspect the new home for needed repairs, mold, plumbing issues, and other problems. This is a critical step towards protecting yourself from unknown expenses after you close on the home. Ask to be present during the inspection and be prepared to learn a good deal about your new home. Failing to have a home inspection performed before signing closing papers is one of the most common mistakes of first-time homebuyers.

If the inspector finds any major problems, bring them up with your real estate agent and discuss options to deal with them. You will most likely want the seller to rectify the problem before you move in or have the cost of the repair deducted from the price of the home.

10. Close

At least three days before closing, you’ll receive the closing paperwork from your lender. This documentation will include all of the final details of the transaction and the terms of your mortgage. If there is anything you do not at this point, now is the time to ask for clarification.

Your lender should also arrange for a notary to visit you so that you can sign the final mortgage paperwork. Then, all that’s left to do is wait for the mortgage to fund and enjoy your new home.