Step By Step Look at Home
The specific way you progress through a home buying
transaction varies depending on the real estate laws and customs
where you live, but there are many home buying steps that are
standard, even though they might not be accomplished in the same
order in every location.
You'll feel more confident about your home buying journey when you
understand what is required of you and every other person who is
involved in the transaction. This guide takes you through it, and
shows you that you're only 11 steps away from buying a home.
Step 1, Get Your Finances in Order
Your credit reports are an ongoing look at how you manage your
finances. You must know exactly what your credit reports say about
your financial history before you apply for a mortgage, because
the reports play an important role in the mortgage approval
process and in determining the interest rate and other loan terms
that a lender offers you.
If you haven't looked at your credit reports, you might be
surprised at their contents, because errors are common.
Step 2, Get Familiar with the Mortgage Industry
Finding the right loan and lender is crucial to your home buying
It's up to you to determine which lender is best for your needs,
and it's always a good idea to have at least a bit of background
about the loan process before you talk to a lender.
Step 3, Get Pre-Approved for a Mortgage
Do you know how much house you can afford? Probably not, unless
you've talked with a lender.
Pre-approval helps you in other ways. Consider this scenario. A
home seller gets two similar offers. One is accompanied by a
letter from the buyer's bank that states she is pre-approved for a
mortgage in the amount of the offer. The other has no supporting
documents. Which offer do you think the seller will consider
Step 4, Determine Your Wants and Needs
Buying a home isn't as difficult as you might think, even if
you're short on funds, but the process will go a lot smoother if
you get familiar with your real estate market and narrow down your
wants and needs before you start looking at houses.
Step 5, Learn to Work with Real Estate Agents
Real estate agents represent buyers, sellers, or both--and in some
states they can work as neutral facilitators for either party.
It's essential to understand agent duties and loyalties before you
make that first phone call.
Step 6, Start Searching for a Home
Your agent will give you multiple listing sheets to study. I'm
sure you'll also pick up House For Sale magazines and read
classified ads in your local newspapers. You'll probably spend
time surfing the Internet for homes. You might even plan afternoon
drives to preview neighborhoods. Those are all excellent ways to
see what's available. Here are some tools to help you narrow your
home buying search.
Step 7, Handle Pre-Offer Tasks
Deciding whether or not you want to buy a house involves a look at
its structure and its features, but there are many other topics
that are every bit as important to your purchase.
Step 8, Make an Offer
There's no one set of instructions that can cover all the
differences in real estate laws and customs that exist throughout
the United States, so the mechanics of making an offer and its
specific contingencies depend greatly on your location. However,
there are some home buying tips that can help you fine-tune your
offer, no matter where you live.
Step 9, Home Inspections and Other Tests
In some states, home inspections are accomplished before the final
purchase contract is signed. In other states, inspections take
place after an offer is finalized. No matter when you do them,
it's critical to decide which inspections and tests you want to
perform. Talk with your real estate agent or other advisor to find
out when inspections should be handled and if additional types of
testing are important for your specific area.
Step 10, Avoiding and Correcting Last Minute Problems
As your closing date nears, everyone involved in your real estate
transaction should check its progress on a daily basis, because
staying on top of things means you'll know immediately if there's
a problem that must be dealt with. Here's a bit of information
that focuses on a few common problems that home buyers must deal
with before they close on a house.
Step 11, You're on the Way to Closing
Most of your home buying problems are behind you now and you're on
your way to closing, also called settlement, the event that
transfers ownership of the property to you. Just a few more things
to learn, a few more things to do, and you're there!
The steps outlined in this article are a general home buying
guide. You will encounter issues specific to your location and
your transaction, issues that can best be explained and handled by
your local real estate agent, your lender, your attorney, your
closing agent, or others who are helping you complete the home
buying transaction. Never hesitate to ask questions. Ask as many
questions as necessary to help you understand the entire home
buying process. You are making a long term commitment and spending
a major amount of money--you'll feel much better about the
transaction if you stay informed and understand what's happening
every step along the way.
How Do You Learn the Basics?
Talk to a real estate agent about the typical home buying
scenario. This is not a meeting that should lead to an agreement
for the agent to represent you.
It's simply a general discussion about the real estate customs in
your area. An agent who won't take fifteen minutes to help you
understand what to expect when you're buying a home isn't much of
an agent, so if the first few calls don't produce someone who will
help, keep looking.
If you don't want to talk with a real estate agent, how about a
bank loan officer or mortgage broker? They look at home buying
from a different perspective, but can usually give you a basic
overview of the process.
Home Buying Questions to Ask
If you decide to work with an agent, will the agent help you
compose your offer to purchase a home? If not, who does help?
1. If the agent uses fill-in-the-blank forms, ask for a blank
sample copy to take home and study.
2. What types of disclosures are sellers in your area required to
give to buyers? Can the agent give you a sample copy of typical
3. What types of home inspections are standard in your area? Are
there other inspections that the agent recommends?
How much do the inspections usually cost? Are they regarded as a
When are inspections done?
4. Is a survey required for most transactions? If so, who
typically pays for it, the buyer or the seller?
5. Who does the title search to verify that the deed is problem
free, attorneys or a title company? What's the average cost for
6. Who acts as settlement agent, the person who puts together
final paperwork for you to sign? (attorney, title company
personnel, real estate broker, other)?
7. Other than loan costs, what's the average total cost for other
Taxes, settlement agent fees, etc.
8. How long does it usually take to close on a home once an offer
That's a good start. After you have the answers to those
questions, you'll have a better feeling for the basic customs in
Always Keep a Cool Head
Even simple problems can be a burden when you have so many details
to take care of, so don't over-react if you hit a few snags on the
way to closing. Keep a cool head and work with the people helping
you through the transaction to resolve any issues that pop up.
Now Dig In to the Home Buying Process
At this point, your remaining steps are no different than the
steps nearly every home buyer must take. It's time to start
digging into the details you need to get through the home buying
A good place to start:
You're Just 11 Steps Away from Buying a Home
The tools in that document help you branch off into the specific
topics you'll encounter during your home buying journey.
Take a few deep breaths and relax. The entire process can be a fun
adventure if you let yourself have some fun with it!
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