Feeling overwhelmed by the process of buying a house? If so, you’re not alone. In fact, purchasing a home is said to be one of the most stressful things you can ever experience. But it doesn’t have to be.
Staying well-informed and knowing what to expect ahead of time can help you feel more in control and less stressed out.
Here’s a list of seven easy steps to help you understand the process of how to buy a home.
- Plan ahead and save. If you’re serious about buying a home, you need to be financially prepared to afford it. How? By paying off outstanding debt, saving for a down payment and improving your credit score to prevent potential problems down the road.
- Determine how much home you can afford. One of the first steps to buying a house — and perhaps the most important — is to figure out how large a down payment you’ll need to save and how much of a mortgage you can afford. Two tools to help you do this are using a down payment calculator and requesting a pre-qualification from your lender. A pre-qualification provides basic information to assist in the sales process and helps you understand how much you can spend.
- Research locations. There are a lot of questions to ask yourself when deciding where to buy a home. Do you prefer living in the city, a suburb or a rural area? How far are you willing to live from where you work or from the closest hospital? What are the neighborhood crime rates, and how good are the schools in the area? Do your research ahead of time so that, once you’re ready to start visiting properties, you have a clear idea where you’d like to purchase a home.
- Choose the right type of home for you. Deciding which type of home is best for you depends on your lifestyle and plans for the future (much like researching locations). If you’d prefer not to have to deal with upkeep and maintenance, perhaps a condominium would be ideal. If you or a family member have mobility issues, you may want to avoid homes built with more than one level. Knowing these types of things before you start looking at homes can help you narrow down your options.
- Explore different financing options. Depending on your financial circumstances and experience, you may qualify for one or more types of down payment assistance — especially if you’re a veteran or first-time homebuyer. It also helps to investigate different mortgage options (e.g., fixed-rate vs. adjustable-rate mortgages) and get multiple quotes from different lenders for comparison.
- Work with a real estate agent. Once you’re ready to begin visiting properties for sale, the best way to save time and money is to work with a real estate agent. They can not only help you find the right home to buy but also play an invaluable role in negotiating a successful transaction.
- Get pre-approved before you make an offer. So, you’ve found the perfect home and you have your finances in order. Next up: Make an offer. But before you do, it’s a good idea to get a pre-approval from your lender. This is a more formal and involved process than a pre-qualification and results in a letter verifying the specific amount your bank will lend you, which gives the seller more confidence and puts you in a superior position to negotiate for a home.