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The Process of Buying A House

There’s a lot more to the process of buying a house than just signing on the dotted line. We’ve compiled a step by step introduction in this article.

1. Define your finances

The first step in the process of buying a house is always deciding how much house you can actually afford, taking into consideration any other costs, such as private mortgage insurance, interest, and closing costs. Remember that a good rule of thumb is that your mortgage payment should not exceed 28% of your gross monthly income.

2. Find a mortgage

Getting pre-qualified for a loan can be a huge benefit when it comes to making a bid. In addition, knowing exactly how much you’ve got to work with prevents you from getting enchanted by a home that turns out to be unaffordable. Compare types of loans, rates, and get quotes from both lenders and brokers.

3.  Go shopping

Time for the fun part! The most exciting part in the process of buying a house is finding the home of your dreams, and this is the step in which you’ll do so. Pick a real estate agent you feel comfortable with and trust, and go find your home. Consider factors like whether the home will need updates or repairs, location, and potential added expenses, such as fire or flood insurance.

4. Make an offer

Now that you’ve found the perfect house, you need to make a bid. Before doing so, compare recent sale prices around the area and whether they tend to be higher or lower than the list price of the home of your choice, so that you don’t over or under bid.

5. Get an inspection

Once your bid has been accepted, be sure to get a professional home inspection. An inspector may see an important flaw you may have missed. This way, you’ll not only know what to expect, but also whether you need to budget in any repairs.

6. Purchase private mortgage insurance

If you’re putting less than 20% down on a home, you’ll need to buy private mortgage insurance, which protects the lender in case of a default. Once you’ve paid off 20% of your loan, you’ll no longer be required to pay it, but to close on a home, it’s required.

7. Closing

This is the final step in the process of buying a house. On closing day, you’ll typically meet with your agent, the seller, the lender, and an attorney. You’ll sign paperwork such as the Truth In Lending Act, the mortgage not, the deed, and HUD Settlement Statement. The title will be transferred to you, and you’ll have joined a nation of homeowners!

-Katarina Combs

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