THE BUYING PROCESS
Home Buying Guide: A Step-by-Step Process
Figure Out What You Can Afford
Homeownership is one of the biggest financial decisions you’ll make. Before visiting open houses, ensure that you can afford your dream home.
Most buyers require a mortgage loan, so it's important to check your finances beforehand to avoid mortgage application denial.
Use this tool to determine your loan eligibility.
Use a Mortgage Calculator
A mortgage affordability calculator can help you understand:
How much house you can afford
Loan terms and interest rates
Down payment amount
Monthly mortgage payments
Estimated property taxes
Try the mortgage calculator here
Check Your Credit Score
Your credit score affects your mortgage eligibility and interest rates.
Verify your credit report for errors.
Pay down high-interest debt to improve your credit score and lower your debt-to-income ratio.
Arrange the Down Payment
Your down payment depends on the type of mortgage:
Conventional loans: 3% - 5%
FHA loans: 3.5%
VA and USDA loans: 0%
To avoid private mortgage insurance, a 20% down payment is recommended.
Set aside extra funds for closing costs and potential repairs.
Find a Lender and Get Pre-Approved
Home buying typically takes about four months. Pre-approval is a crucial step before house hunting.
Mortgage Pre-Approval vs. Pre-Qualification
Pre-Qualification: An estimate of what a lender might offer.
Pre-Approval: A detailed review of your financial situation, determining exactly how much a lender is willing to provide.
Compare multiple mortgage lenders and choose one that matches your communication preferences.
Find a Real Estate Agent
A knowledgeable real estate agent can:
Help locate homes
Offer market insights
Guide negotiations
Buyers typically do not pay agent fees; the seller covers them.
Look for Your Dream Home
Use a house-hunting checklist to compare homes. Consider:
Home Features: Square footage, floor plan, storage space, roof condition, etc.
Neighborhood: Traffic, noise, safety, local amenities.
Schools: Reputation, curriculum, class size.
Convenience: Distance to work, supermarkets, hospitals, and recreation.
Make an Offer and Negotiate
Your real estate agent will guide your offer strategy. Consider:
Market conditions
Asking price
Competing offers
Time on the market
An earnest money deposit (1% - 3% of the purchase price) secures your offer in escrow.
Get Final Mortgage Approval
Even with pre-approval, expect to provide additional documentation:
Employment & income verification
Asset statements
Credit & liabilities assessment
Property details
Secure Homeowners Insurance
Lenders often require homeowners insurance before loan approval. Compare policies to find the best coverage and rates.
Schedule a Home Inspection and Appraisal
Home Inspection: Evaluates structural integrity and systems (plumbing, electrical, etc.).
Appraisal: Determines market value to ensure the loan amount aligns with the home’s worth.
Close on Your New Home
Finalizing your home purchase involves:
Reviewing the closing disclosure at least three days before closing
Conducting a final property walk-through
Transferring funds for down payment and closing costs
Signing necessary paperwork
Providing proof of homeowners insurance
Ready to Get Started?
Begin by reviewing today’s mortgage rates to determine your affordability.
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To ensure that your buying process is smooth, here is what to expect in closing:
Work with lender
Make your earnest money deposit
Have home professionally appraised
Get homeowner’s insurance
Coordinate paperwork with underwriter
(if contingency applicable) get a home inspection and request repairs
Do a final walk-through
Submit your downpayment and closing costs
Close escrow and sign all paperwork
What documents do I need to prepare for a home loan prequalification?
2 years tax returns (including W-2 forms)
Bank statement for 2 months
ID and social security card
1 month worth of paystubs
