A Guide to Buying a House

Discover how to buy a house and the steps involved.

10 Steps to Buy a House

1) Make sure your credit report is accurate.

It is important to obtain a copy of your credit report as the first step in researching how to buy a house. What is the minimum credit score required to purchase a house? Your credit score significantly determines whether you qualify for a loan, what type of loan you will receive, and what interest rate you will pay. In order to determine whether you are eligible for a particular type of loan, you should obtain a copy of your credit report. There are different types of mortgages (Conventional, FHA, VA, USDA, and Jumbo) that require different credit scores, so it is imperative that you obtain a copy of your credit report.

You will likely be eligible for a lower interest rate if your credit score is higher. Conventional loans require a credit score of 620, although some lenders require a credit score of 700 for first-time homebuyers. You can rapidly research ways to improve your credit score before you begin house shopping if your credit score is lower than anticipated. Your interest rate is likely higher if your credit score is lower than expected.

2) Find out how much you are able to afford.

The next step in the home buying process is determining your budget. You can use an online mortgage calculator to determine how much you can afford. With a mortgage calculator, you can calculate your monthly payment, including interest, taxes, insurance, HOA, and private mortgage insurance. A home affordability calculator can also assist you in determining your affordability. Budget for closing costs, which are usually between 2% and 5% of the purchase price.

The sooner you know what you can afford, the sooner you should start saving for a down payment. For first-time homebuyers, a 20% down payment may not be required. You'll need private mortgage insurance if you choose to put less money down. VA loans require very little down payment.

3) Obtain a pre-approval

It is important to get a pre-approval mortgage when researching how to buy a house. Pre-approvals start the mortgage process and let a lender know how much you can borrow. Furthermore, you will be able to make an offer more quickly when ready. You should get quotes from multiple lenders rather than just the first one you see or your bank. To find the best mortgage rate for your homebuying goals, conduct research since different lenders offer different mortgage options and interest rates.

4) Locate a real estate agent.

In order to find the right home and get the best price, selecting the right real estate agent is essential. In order to find the right real estate agent for your home-buying journey, you should conduct prior research and ask a number of questions.

5) Find homes for sale by searching

The next step in the purchasing process is to browse for homes in your area. Your wish list should serve as a guide in your search for a home. Therefore, when searching for homes on the MLS, you can narrow your search to a particular price range, a particular style of home, a particular neighborhood, and other features.

6) Visit open houses and take a tour of the home

Next, you will want to attend open houses and home tours in person or virtually. A home tour can help you determine what type of home you prefer, what layout you prefer, and what features you prefer or do not prefer. You may confuse the different features or concerns you have about one house with those you have about another if you are touring multiple homes at once, so take notes as you tour the houses. Make sure to ask your agent for advice and pick their brain.

7) Making an Offer

Having found the home of your dreams, it is time to work with your real estate agent to make an offer. It is important to discuss your offer strategy with your agent: Is the home fairly priced? How will your offer stand out from the competition? Depending on the current housing market conditions, your real estate agent will be able to provide you with the best advice. When making an offer that will stand out to home sellers, they will consider your budget and the asking price for comparable homes in your area.

8) Be prepared to negotiate

Understanding how to buy a house requires understanding that you will likely receive a counteroffer and will need to negotiate with the seller. Through your agent, you will be assisted with the negotiation process and decide which option is best for you: waiving contingencies, raising your earnest money or overall price, or changing the closing date. It is likely that you will have to go back and forth with the seller before reaching an agreement.

9) The home should be inspected.

An inspection of a home is one of the most important steps in the process of purchasing a residence. It identifies any structural, electrical, or plumbing problems with the property. Hiring a professional home inspector to inspect the property thoroughly is important. All major systems will be tested, including the plumbing, electrical, heating, and cooling systems, as well as the home's roof, foundation, and exterior. The seller may be able to negotiate repairs or a lower price if the inspection report indicates any significant issues with the house.

10) Take possession of the keys

In most cases, you will receive your keys from a title company or real estate attorney after 5 p.m. on your closing date, after the money has been exchanged on your closing date. The house may not be turnkey ready, but you might want to do some remodeling and maintenance before moving in. Hire movers, purchase new furniture and appliances, set up utilities, etc. You will pay for these once the house is yours, but you may wish to set up a separate post-move budget to cover these costs.