A first-time home buyer likely doesn’t know the process of buying a house. They will often make mistakes, such as paying more than they can afford or moving too fast. These can cost you in the long run, especially if the home has problems like structural damage or mold.
It’s important to know the home-buying process before you start. Not only does it take much of the stress away, but it also helps you make more confident purchases.
These are the steps to buying a house the right and legal way.
1. Assess Your Financial Readiness
Before diving into the home-buying process, assess your financial health. Not every individual or family knows how to budget properly. They may find themselves over their heads with payments they can’t handle.
Ask yourself about:
- Your income stability
- If you have good credit
- How much can you afford to pay monthly
- If you have enough saved for a down payment
- How much money you have left over every month
As a first-time buyer, you may qualify for certain programs and grants to reduce your financial burden. It’s crucial to understand your budget before even looking at homes online.
A 20% down payment is normal when purchasing homes, but many lenders allow less with private mortgage insurance (PMI).
2. Get Pre-Approved for a Mortgage
One of the first concrete steps when buying a house is securing mortgage approval. A pre-approval tells you how much a lender is willing to offer based on your financial profile. They’ll look at your:
- Credit history
- Employment status
- Income and assets
- Debt-to-income ratio
Pre-approval shows sellers you’re a serious buyer, giving you a competitive edge in hot markets. Be prepared to provide documents like tax returns, bank statements, and proof of income.
If denied, you can explore other financial options such as FHA loans or USDA loans.
3. Find the Right Real Estate Agent
Trying to sell a home without a realtor is a great challenge for any property owner. While it is possible, it usually requires a lot of personal experience in the industry.
A knowledge agent can help facilitate real estate transfers for potential buyers. A good agent can help you:
- Navigate listings that match your preferences and budget
- Arrange viewings
- Negotiate the price and terms
- Guide you through paperwork and legal requirements
Look for agents with experience in your desired neighborhood and who are familiar with real estate transfers in your state. Recommendations from friends and family can help. Otherwise, you can check online reviews.
4. Start House Hunting
Once you know your financial situation, you can start shopping for your dream home. Make a list of must-haves and deal-breakers.
For example, consider how many bedrooms and bathrooms you’ll need. Is close proximity to schools or work a priority?
You may want a home with a large yard or outdoor space. It’s also important to know the age and condition of the home you desire.
Use online platforms and open houses to explore options further. Your agent can also provide listings that fit your criteria.
5. Make an Offer
You eventually find a house that ticks all the boxes. Next, you’ll work with your agent to make a competitive offer to the sellers. Your offer should be based on:
- The home’s market value
- Comparable sales in the neighborhood
- Your budget and pre-approval amount
- Current demand for similar properties
Some deals allow for a contingent offer that requires the sellers to make repairs and adjustments before the sale moves forward. Alternatively, the buyer may make this offer if they’re still waiting to secure financing.
A home typically remains in this status for anywhere from 30 to 60 days. The buyer and seller must agree on a deadline for these contingencies.
The seller can accept, reject, or counter your offer. They can also back out of the contingent offer, though there may be legal and financial consequences. It all depends on the contract they’ve signed.
6. Schedule a Home Inspection
A home inspection checklist is crucial to ensure the property is in good condition. With that said, do not attempt to do the inspection yourself unless you have experience in that line of work.
Hiring a certified home inspector helps you evaluate:
- Roof and gutters
- Foundation and structural issues
- Plumbing and electrical systems
- HVAC systems
- Appliances and fixtures
- Mold and water damage
- Pests and bugs
Some homes can benefit from hiring multiple specialized inspectors, such as electricians and plumbers.
Keep in mind that there are buyers who are fine obtaining homes in need of repairs for a cheaper cost. This is not often the norm when selling, though.
7. Get a Home Appraisal
Lenders require a home appraisal to confirm that the property’s value aligns with the loan amount. The appraisal ensures that the bank they aren’t lending more than the home is worth.
If the home appraises for less than you offered, you may need to pay the difference in cash or renegotiate the price with the seller. Your contract may allow you to walk away from the deal without issue.
This step provides an extra layer of protection for buyers who may not understand market trends. It also means you’re paying what the house is actually worth instead of more for something worth less.
8. Conduct a Title Search and Secure Title Insurance
Something to know before you can get a mortgage approval is the legal status of the property and title. You want to make sure there are no liens, disputes, or issues with past real estate transfers.
A title company or real estate attorney usually performs the title search. You can also visit the county clerk’s office to access public records related to the property’s history.
Title insurance protects both you and your lender from potential ownership challenges. It’s a one-time fee but provides lifelong peace of mind.
9. Finalize Mortgage Approval
Once the appraisal and inspection are complete, you can finalize your mortgage approval. At this stage, lenders will review the appraisal and inspection results, as well as conduct a final credit check. They will verify employment and income.
Lenders typically require proof of insurance before finalizing the loan. Homeowners’ insurance covers damage or loss to the structure due to various perils, such as fire, theft, and vandalism. Lenders may require flood insurance if the property is in a flood zone.
Be cautious about making large purchases or changing jobs during this time. Any financial instability could derail your loan approval.
10. Review the Closing Disclosure
At least three business days before closing, you should receive a Closing Disclosure. This document outlines:
- Final loan terms
- Closing costs
- Taxes and fees
- The amount you need to bring to closing
- Summaries of transactions
- Projected payments
- Other disclosures, like the appraisal or missed payments
Compare this document with the Loan Estimate you received earlier. Ask your lender about any discrepancies.
If the disclosure has incorrect information, it can lead to delays, fines, and other issues. If changes occur after the initial disclosure is provided, the lender must provide a corrected form.
11. Do a Final Walkthrough
A day or two before closing, perform a final walkthrough with your agent to ensure the home is in the agreed-upon condition.
Make sure repairs have been completed and there’s no new damage. Appliances and fixtures should remain as negotiated. The seller should have removed all personal belongings, regardless of whether they intend to keep them or not.
This is your last chance to raise concerns before the sale is finalized. Document everything you see that you want to bring up, such as leftover trash or broken items.
Notify your real estate agent immediately if you see a problem before closing. They may be able to negotiate a credit at closing to cover costs or delay the closing to give the seller time to fix the issue.
12. Close On the House
Closing is the final step in the home-buying process. During this meeting, you’ll:
- Sign all necessary documents
- Pay closing costs and the down payment
- Finalize the real estate transfer
- Receive the keys to your new home
Some companies allow you to sign documents electronically. A closing may also happen through mail or over the internet.
Always make sure you carefully read and understand the documents. Do not sign if you see any errors. Make sure you understand how your payments will change over time.
The seller will then hand you the keys to your new home. The deed is officially recorded with the county or municipality. You are now free to move into your house as soon as you’d like.
Follow These Steps to Buying a House
Admittedly, there are a lot of steps to buying a house the traditional way. A typical home purchase can take anywhere from 30 to 60 days once you’ve decided on a property. However, various problems could cause delays and push back the closing date.
Sellers who want a much quicker experience should consider using WeBuyHouses.com. Our Memphis office buys houses fast, for cash, in any condition. You can expect a cash offer within 24 hours of our walkthrough of your home.
Reach out today to learn more and sell your house fast.
