The purchase of a home is an important milestone. But for first-time homebuyers who aren’t sure what to expect, the process can seem daunting and intimidating. If you have made the decision to attempt buying a house in these uncertain times with rising rates and high list prices can feel overwhelming. But we are here to help, and you’ll likely find the benefits outweigh the hassle.
We’ll guide you through all the important steps in buying a house, so you know exactly what to expect each step of the way.
What do you need to buy a house?
Before you look for the perfect house, ensure that you are prepared to buy it. To buy a home, you need:
- Strong credit rating
- Savings for a down payment and closing costs
- Preapproval for a mortgage loan
- A qualified real estate agent
Once you have created your home-buying list, begun the process of buying a home, and finally found the property that you love, be sure to also have the following:
- All necessary documentation
- Clear, complete understanding of the process involved in purchasing a house
The House Buying Process In 10 Steps
Real estate transactions involve a lot of important information. You’ll need to make sure you are able to represent your interests at all times. It is important to be prepared. Here are the steps to follow before you get the keys to your new place.
You need to know all the details involved in a real estate transaction. Knowing what to expect is the best way to prepare. These are the steps that you will need to take before you receive your keys to your new house.
You need to know all the details involved in a real estate transaction. Knowing what to expect is the best way to prepare. These are the steps that you will need to take before you receive your keys to your new house.
Step 1: Verify Your Credit Score
Before you start the home-buying process, make sure that you are financially able to handle all the costs associated with buying a home. You should do your research, review your finances, and check your credit score.
Investigate Different Areas
Before you buy a house, it is important to determine where you are going to live. You should make a list of areas that you are interested in moving to, and then do some research. While it is important to research crime rates and ratings for public schools in the area, don’t overlook the simple things.
Is there a grocery store near you? What is the commute time to work? When you are looking at different cities, keep these things in mind.
Is there a grocery store near you? What is the commute time to work? When you are looking at different cities, keep these things in mind.
Credit Score
Finding financing can be challenging. The credit report is required by mortgage lenders. Based on this information, they will assess your financial history and credit score to help you qualify for a home loan. It is important that you are always one step ahead and know where your standing is.
A qualifying FICO, a score of 620 or more is required to obtain a conventional loan. But if you qualify for an FHA loan, some lending agencies only require a score of 580. Although the VA does not require you to have a certain credit score in order to purchase a house using a VA loan for your home, lenders are able to set their own policies.
How much interest you can get on a mortgage will depend on your credit history and credit score. Higher credit scores are more likely to get better terms and mortgage rates. Before you dive into the process, make sure that you fully understand your credit.
A qualifying FICO, a score of 620 or more is required to obtain a conventional loan. But if you qualify for an FHA loan, some lending agencies only require a score of 580. Although the VA does not require you to have a certain credit score in order to purchase a house using a VA loan for your home, lenders are able to set their own policies.
How much interest you can get on a mortgage will depend on your credit history and credit score. Higher credit scores are more likely to get better terms and mortgage rates. Before you dive into the process, make sure that you fully understand your credit.
Step 2: Decide how much you can afford
It’s a good idea to determine how much house you can afford before you talk with a mortgage lender. While a lender can tell you how much you are eligible for, you need to make sure you don’t exceed your means.
Experts recommend that you spend no more than 30% on housing costs. These include:
Principal: This is what you borrowed to buy your home.
Interest: This is what the lender charges to borrow the funds.
Property taxes: These taxes are based on your home’s value and location.
Insurance: Homeowners insurance protects your house against all damages.
Association dues: These fees are required if your house is a member of a homeowners association. This fee is not required if your home does not belong to a homeowners association.
To ensure a smooth home-buying process, it is important to understand what costs you will be responsible for and when. We recommend that you speak with your lender or real estate agent to find out which costs you will have to pay upfront.
First, save money for your down payment. It was once recommended that you save 20% of the home’s purchase price to pay your down payment. However, this is not the norm anymore. A conventional loan requires a minimum down payment of 3%. An FHA loan can be obtained with a 3.5% down payment.
You should remember that the greater your down payment, equity, and monthly mortgage payments, the lower you will be. Paying more upfront can help you save interest and make it less likely that you’ll have to pay private insurance. You should weigh all your options in order to determine the right down payment for you. While a larger down payment is a great option, it can also drain your savings.
Closing costs are another large expense that you should plan for. These are fees that you pay to secure your loan and process it. The exact amount that you will need to close your loan depends on the amount of your loan and the tax laws in your area. However, closing costs can be anywhere from 3% to 6% of the purchase price.
Experts recommend that you spend no more than 30% on housing costs. These include:
Principal: This is what you borrowed to buy your home.
Interest: This is what the lender charges to borrow the funds.
Property taxes: These taxes are based on your home’s value and location.
Insurance: Homeowners insurance protects your house against all damages.
Association dues: These fees are required if your house is a member of a homeowners association. This fee is not required if your home does not belong to a homeowners association.
To ensure a smooth home-buying process, it is important to understand what costs you will be responsible for and when. We recommend that you speak with your lender or real estate agent to find out which costs you will have to pay upfront.
First, save money for your down payment. It was once recommended that you save 20% of the home’s purchase price to pay your down payment. However, this is not the norm anymore. A conventional loan requires a minimum down payment of 3%. An FHA loan can be obtained with a 3.5% down payment.
You should remember that the greater your down payment, equity, and monthly mortgage payments, the lower you will be. Paying more upfront can help you save interest and make it less likely that you’ll have to pay private insurance. You should weigh all your options in order to determine the right down payment for you. While a larger down payment is a great option, it can also drain your savings.
Closing costs are another large expense that you should plan for. These are fees that you pay to secure your loan and process it. The exact amount that you will need to close your loan depends on the amount of your loan and the tax laws in your area. However, closing costs can be anywhere from 3% to 6% of the purchase price.
Step 3: Find a Lender and Get Preapproved for A Mortgage
Next is to find a lender for mortgage financing and get pre-approved. Many first-time buyers don’t realize that they can shop around for lenders before selecting one. Doing your research can make a big difference.
Get Different Loan Estimates
Lenders can have different qualification guidelines, interest rates, and closing costs. It’s important to research all options. Ask each lender to give you a Loan Estimate. This will show you the terms of your loan, the projected payments, and any closing costs.
Be sure to look beyond the bottom line. While a lender may offer a great deal, it might not be worth it if they provide poor customer service. It can be a difficult and lengthy process to buy a house. To make it as easy and straightforward as possible, you need to trust your lender.
Be sure to look beyond the bottom line. While a lender may offer a great deal, it might not be worth it if they provide poor customer service. It can be a difficult and lengthy process to buy a house. To make it as easy and straightforward as possible, you need to trust your lender.
Get Preapproved
Contrary to popular belief prequalifying for a loan is not a guarantee of getting one. Furthermore, not all qualifications will be equal. Prequalification in the traditional sense means that lenders will only use the information you provide to estimate your finances.
Preapproval for a loan is a process that involves a detailed investigation of your financial situation, including verification of income, assets, and credit rating. Preapproval for a loan is a guarantee that you will be approved. This assumes your financial situation does not change between preapproval, closing, and appraisal.
Preapprovals are helpful as they tell you how much money the lender will allow you to borrow, and the cost of getting the loan. Preapproval also shows the seller that you are serious about purchasing, which could make a big difference in a bidding war.
Preapproval for a loan is a process that involves a detailed investigation of your financial situation, including verification of income, assets, and credit rating. Preapproval for a loan is a guarantee that you will be approved. This assumes your financial situation does not change between preapproval, closing, and appraisal.
Preapprovals are helpful as they tell you how much money the lender will allow you to borrow, and the cost of getting the loan. Preapproval also shows the seller that you are serious about purchasing, which could make a big difference in a bidding war.
Step 4: Find A Real Estate Agent
There are many steps involved in buying a house. Some home buyers will decide to go it alone, but a reliable and trustworthy real estate agent can help make the process much easier.
A real estate agent will help you through the entire home-buying process. They will assist you in finding the perfect home, asking the right questions, making an offer, negotiating, and receiving all disclosures. Perhaps even more important, having a professional real estate agent in your corner can give you peace of mind.
Asking the right questions is the best way to find the right agent. Ask these questions:
- What is your experience as a real estate agent?
- What sets you apart from other agents?
- What number of clients do you currently work with?
- What experience have you had in finding homes within my price range?
- What knowledge do you have about the area I’m interested in?
- Would you be willing to give me references?
Once you’ve selected the right agent for you they’ll review your approval letter and discuss your budget. They will also help you to set priorities.
Step 5: Begin the Home Search Process
After you have met with your agent to discuss your needs, it is time to start house hunting. Keep your priorities in the forefront as you look at houses. It’s unlikely that any listing will match your dream home. So, don’t be too picky until you can see the house in person.
Visit Different Areas and Houses
It’s a fact that after viewing a few houses, they can start to blend together. So be organized and ensure you talk with your agent about the things you like and don’t like about each property. Take notes when you visit a listing and reflect on the property and its surroundings. Here are some things to keep in mind:
- The home’s size, style, and physical condition
- The area where the home is located
- Imagine your commute
- Schools in the vicinity
Even though a house in poorer conditions may seem like a bargain, you might end up paying for the repairs. Even older appliances can be a nuisance, especially if you end up paying for the replacement. So be realistic about what you can afford to spend on each house, but also what conditions you’re comfortable living in.
Step 6: Create an Offer
Once you have found the home that you are interested in, it is time to make an offer. To determine the fair price, ask your agent to do a comparative market analysis based on comparable sales in the area. You will have more leverage if there is less interest and the house has been off the market for a longer time.
Talk to your agent to determine if it is a good idea to include contingencies in any offer. A contingency in an offer is a clause that says that the buyer can cancel the contract at any time if the condition is not met.
Despite sellers’ resistance to offers that include contingencies, there are some contingencies that are worth considering regardless of the seller’s feelings.
Talk to your agent to determine if it is a good idea to include contingencies in any offer. A contingency in an offer is a clause that says that the buyer can cancel the contract at any time if the condition is not met.
Despite sellers’ resistance to offers that include contingencies, there are some contingencies that are worth considering regardless of the seller’s feelings.
Mortgage Contingency
You must include a mortgage contingent in your offer if your ability to pay for the home depends on your ability to get a loan. If you are unable to get financing, this contingency will allow you to cancel your offer.
This contingency should be included in your offer, even if you have been pre-approved for a loan. You’ll be responsible for the earnest money deposit, regardless of whether or not you have a mortgage.
This contingency should be included in your offer, even if you have been pre-approved for a loan. You’ll be responsible for the earnest money deposit, regardless of whether or not you have a mortgage.
Home Sale Contingency
A home sale contingent is required if you plan to sell your house and need the money to buy a new one. You will have a set period of time to find a buyer for your home.
The home sale contingency allows you to cancel your offer and get your earnest money deposit back if you are unable to find a buyer. Although many sellers won’t accept this contingency, it is worth considering in most cases.
The home sale contingency allows you to cancel your offer and get your earnest money deposit back if you are unable to find a buyer. Although many sellers won’t accept this contingency, it is worth considering in most cases.
Inspection Contingency
A contingency for inspection is another option. To ensure that you are fully informed about the condition of the house, it is important to inspect the property before you make an offer. You can negotiate an offer based on any repairs needed, but you have the right to end the agreement if you feel the home requires more work than you are able to handle.
Earnest Money Deposit
You will need to make an earnest money deposit along with your offer. Also known as an escrow, The seller will be required to pay an upfront deposit. This is money that you pay in order to prove your seriousness and make them feel more at ease taking their home off of the market.
This deposit amount can be reduced or increased. An earnest money deposit typically amounts to 1 – 3 percent of the purchase price. Talk to your agent about the local market. The money is kept in an escrow account and can be used to pay your down payment or closing costs at closing.
The seller can keep your earnest money deposit if you decide not to buy the house for any reason other than what is specified in the contingency. Before you submit an offer, it is important to carefully consider the terms under which you might need to withdraw from the contract.
A contingency can make the difference between losing or keeping your earnest money.
This deposit amount can be reduced or increased. An earnest money deposit typically amounts to 1 – 3 percent of the purchase price. Talk to your agent about the local market. The money is kept in an escrow account and can be used to pay your down payment or closing costs at closing.
The seller can keep your earnest money deposit if you decide not to buy the house for any reason other than what is specified in the contingency. Before you submit an offer, it is important to carefully consider the terms under which you might need to withdraw from the contract.
A contingency can make the difference between losing or keeping your earnest money.
Step 7: Schedule a Home Inspection and Home Appraisal
Although you may feel like you should be finished when your offer has been accepted, there are still some important steps. You will need to arrange for a home appraisal and inspection.
Home inspection
It is vital to have a home inspection done. This will help you identify any areas that need immediate repairs or renovations, and also highlight potential future work. Hire a third-party professional home inspector to inspect the house you are considering buying.
You can ask the seller to make any significant repairs before closing if you feel they are necessary. You may be able to withdraw your offer if the seller refuses to make repairs or an agreement is not reached.
You may be able to negotiate with the seller if you have an inspection clause in your contract. This could allow you to either make repairs, deduct the cost from the purchase price or end the contract and return your earnest money.
You can ask the seller to make any significant repairs before closing if you feel they are necessary. You may be able to withdraw your offer if the seller refuses to make repairs or an agreement is not reached.
You may be able to negotiate with the seller if you have an inspection clause in your contract. This could allow you to either make repairs, deduct the cost from the purchase price or end the contract and return your earnest money.
Home Appraisal
Your lender will request that the home be appraised before they release funds. Based on comparable sales, market trends, and a thorough inspection of the property, a home appraisal will estimate the actual value of a home.
Remember that the lender will only lend funds to cover the appraised house value. If the appraisal is lower than the purchase price, you’ll need to negotiate the price or make up the difference. This is why a mortgage contingency is so important.
Remember that the lender will only lend funds to cover the appraised house value. If the appraisal is lower than the purchase price, you’ll need to negotiate the price or make up the difference. This is why a mortgage contingency is so important.
Step 8: Purchase homeowner’s insurance
You may be eager to move on with the home-buying process. However, don’t forget the final walkthrough. If there are any issues, a final walkthrough can be helpful.
Final walkthroughs are usually held a few days before closing to allow you to make sure all repairs have been made.
Final walkthroughs are usually held a few days before closing to allow you to make sure all repairs have been made.
Step 10: Get Closed on Your New Home
Congratulations! Congratulations! You have reached the final step of the process. Make sure to review the Closing Disclosure. This will detail the terms and any remaining fees. The disclosure will be sent by your lender at least three days prior to closing.
The property title will be transferred from the seller to the buyer at closing. This process is usually overseen by a closing agent. It can take place at a title office, management company, escrow office, or your home.
The agent will make sure that all parties are present at closing. The agent acts as a mediator and verifies that all documents have been signed. After all documents are signed, the agent will make sure that funds are properly disbursed and paid, including closing fees.
You have two main responsibilities during closing:
The property title will be transferred from the seller to the buyer at closing. This process is usually overseen by a closing agent. It can take place at a title office, management company, escrow office, or your home.
The agent will make sure that all parties are present at closing. The agent acts as a mediator and verifies that all documents have been signed. After all documents are signed, the agent will make sure that funds are properly disbursed and paid, including closing fees.
You have two main responsibilities during closing:
- Signing legal documents: This includes closing disclosure, promissory notice, deed-of-trust, and certificate of occupancy.
- Closing costs include the fees you pay for your mortgage application, appraisal and survey, title search, and down payment.
The Bottom Line
The bottom line is that it helps you to understand the home-buying process before you buy
Although it can seem daunting to buy a house for the first time, you don’t need to worry if you have the knowledge and resources. If you follow the steps in this article and work with a trusted realtor, it will be easier to buy a house. Our advice can help you concentrate on what is important: enjoying your new home.
Although it can seem daunting to buy a house for the first time, you don’t need to worry if you have the knowledge and resources. If you follow the steps in this article and work with a trusted realtor, it will be easier to buy a house. Our advice can help you concentrate on what is important: enjoying your new home.
Here is our pick for the most trusted real estate agents in McMinnville, Oregon
McMinnville Real Estate | Doty Team
Established in 1998, the Doty Team from McMinnville Real Estate is a full-service real estate company committed to serving their clients, city, and community by providing a broad range of high-quality services. Dedicated to helping people achieve their dreams of home ownership, all agents excel in customer service and work hard to stay on the cutting edge of the industry’s ever-changing demands.
TOP AGENTS
Dom Doty
(503) 435-9070
(503) 435-9070
Devri Doty
(503) 435-7165
(503) 435-7165
Mackenzie Kauer
(971) 241-2066
(971) 241-2066