Lately you've been admiring many homes you see as you drive through various neighborhoods and you've even attended a few open houses. After doing a lot of soul-searching, you've decided the time is right to take the plunge and get serious about buying a house.
After you've unequivocally decided you want to buy a house, the next thing to do is locate a good agent. Ask around and conduct some Internet research to find someone who is experienced, well-known and possesses a good reputation. Some may suggest doing it without an agent, but this isn't necessarily wise, especially if you've never purchased property before. The seller typically pays all the agent's commission fees so, as a buyer, you really have nothing to lose and you'll benefit from the realtor's expertise.
There are a few steps you'll need to take before buying your new home and, to start, you should ask yourself several questions. For instance:
- Where do you want to live?
- What is your price range and space needs?
- How much can you afford for a monthly mortgage payment and still have enough to meet your other expenses?
- Are school districts a priority?
- What kind of outdoor space do you want?
- Do you need to be near public transportation?
- Do you want to live near major roadways or in a more secluded area?
Once you've found an agent (if you've decided to go this route) you can actively start looking at homes. As you consider selecting houses to visit, your agent will likely ask you the above questions and additional ones about your preferences. Things you may not have even thought of asking. Next he or she will then compile a list of homes on the market that meet your specifications. At this point you can start to narrow down the ones you want to see first; this is one of the fun aspects of buying a home.
See as many as you can to get a feel for what's out there. At first it often feels overwhelming and all the houses you visit may look like "the one", but once you get down and really comparison shop, you'll start noticing significant differences. At this point you'll probably get a better idea of what exactly it is you want in a home. Take lots of mental and written notes about the houses you see, this way you can refresh your memory later on when you start to make your comparisons. Take some photos too if you are able.
After the first few showings you'll get a better eye for what to look for and know right off the bat whether a house meets your requirements (and after getting some experience of looking at houses, you may want to re-visit any homes you earlier thought you might like - for instance, a house that appeared to be "the one" earlier might later display obvious flaws you missed the first time)
If nothing grabs at you immediately, don't worry. Occasionally, people do know right away when they've found "the one", but it's very common for people to visit dozens of homes before they start narrowing down options to make a final decision.
Mortgage pre-qualification and approval
It is a good idea early on to check with a mortgage company about approvals for price ranges. You don't want to waste time visiting homes above the amount you'll likely be approved to buy. Getting a pre-qualification helps the process go a little smoother. Some people take it a step further and get pre-approved (which is often advised by experts). The benefits to getting pre-approved means you know how much you can spend. Also, sometimes buyers opt to buy a locked-in mortgage rate, especially if rates are currently good. However, before doing this know the pros and cons. 2
You've found your house! Now's the time to get your loan approved. If you have not done this already, now is the time to get the ball rolling. You make a bid and your agent will write up a contract, then sit down with you and go over your contract. The seller will either accept the bid or submit a counter-offer. A good agent will go over every line in the contract with a fine tooth comb and explain everything to you (one of the best reasons to hire an agent). Once the bid has been accepted, you can move to the next step.
Most states require title searches and home inspections. Investigating the title is important to make sure you are making a bona fide purchase on a property and it ensures you won't run into any legal problems down the road. Occasionally big problems do occur though, and this is why title insurance is an option to consider. 3
In most instances, a home inspection will be done to determine if there are any structural or obvious problems with the home.
Your agent can likely recommend and coordinate this if you don't have a reliable inspector. The home inspection is often required by a lender (if it is not, consider doing one anyway). You can also opt to do lead and radon testing too, typically at an additional and separate cost. Another thing home buyers today have to also consider is the possibility the home might be a former meth lab; if so there could be significant problems.
It is not uncommon for the inspector to find things which either need to be fixed by the seller or are negotiable terms. Go over the information with your agent and decide what you want to do about these issues.
The mortgage company will send someone to appraise the house to complete the loan process. If the appraisal comes in too far under what your offer was, you may have to renegotiate or the bank may ask for a higher down payment.
Once you've determined your down payment, coordinated your financing, agreed on a contract and completed all the requirements of titles, inspections and appraisals, you're almost there. You'll have to go to do a final walk through your new home before the closing to make sure all the agreed upon stipulations were completed. Then you head off to sign the final paperwork and get the keys.
Congratulations, you've just bought a house. Now the fun really begins—unpacking!