Buying a house is exciting.
It’s easy to imagine your life in a new place. But before you start picking out curtains or deciding where the furniture should go, it’s a good idea to get an overview of the steps for buying a house.
While every purchase will vary, the following are the seven basic steps for buying a house.
What are the main steps for buying a house?
- Understand your finances, credit score, and credit history
- Finding the right lender to walk you through the mortgage process
- Get pre-approved for your mortgage
- Deciding What You Want In A Home
- Make an offer
- Secure your financing
- Closing on your home
Let’s take a deeper dive into each step.
1. Understand your finances, credit score, and credit history
One of the most important steps in the home buying process is getting your finances in order, starting with your credit report.
Because your credit score can impact whether your mortgage application is approved and the interest rate you can qualify for.
The best mortgage interest rates typically go to borrowers with good to excellent credit. And lower interest rates can mean smaller monthly mortgage payments.
You can get a free copy of your credit report, once from each agency per year, from Equifax, Experian, and TransUnion.
Carefully review your credit report. If you notice errors, contact the credit bureau to correct the information.
While good credit scores make getting a mortgage easier, borrowers with a lower credit score or a short credit history still have options.
Borrowers with a short credit history or less-than-perfect credit can still get a mortgage with a small down payment—or no down payment—with government-backed loans such as the VA or FHA loan.
Mortgage lenders will also look at your debt-to-income ratio, which is how much income you’re bringing in versus the amount of debt you have. That’s why it’s recommended that you pay off outstanding debt before applying for your mortgage to better your chances for approval.
2. Finding the right lender to walk you through the mortgage process
Finding the right home loan and the right mortgage lender for your situation is crucial to successfully buy your dream home.
Your lender will discuss your home buying goals with you and offer suggestions on how to reach them.
At GO Mortgage, we partner with you to ensure you understand all aspects of the mortgage process, from pre-approval through closing, so that you can make an informed decision.
3. Deciding what you want in a home
Whether online or in-person, looking at different homes can help you decide what you want and can afford to spend on a house. For example, do you want to live in a city? Suburbs? Or does the country life call you?
A pre-approval letter will let you know how much you’re eligible to borrow for a mortgage “up to” a specific amount. Using that as a guide, you can begin to narrow down your choices and find the home you want to buy.
4. Get pre-approved for your mortgage
Pre-approval can help you understand how much you can afford to spend during the home buying process, how much you can expect monthly payments could be, and what interest rate you could get. It can also help your offer stand out.
Pre-approval tells sellers and real estate agents that you’re serious about buying—and financially capable of making the purchase.
At this stage, lenders typically run a credit check. You’ll have to provide financial documentation for the last two years, such as:
- Tax returns
- Pay stubs or W2s
- Bank statements
- Proof of employment
- SSN, Driver’s license, etc.
- Other supporting financial documents
Getting pre-approved can be especially valuable in competitive markets or when a seller has received multiple offers to buy.
5. Make an offer to buy
Making an offer to buy involves working with your real estate agent to let the seller know you’re interested.
Your real estate agent will be a big help when it comes to figuring out your offer and scheduling when you’d like to take possession.
6. Secure your financing
Once your offer to buy is accepted and signed, it’s time to finalize your mortgage.
Your home’s value is a significant part of your mortgage approval process, and most mortgages require a home appraisal.
If your home’s value is assessed too low for your mortgage to be approved, you can always discuss options with your agent.
For example, requesting a reduced purchase price based on the home’s appraised value could be a cost-saving solution.
This is also a good time to have a home inspection done.
While inspections aren’t mandatory, they can provide a wealth of information about the state of your home.
At this stage, your lender may ask for additional information or documents before sending your application to the underwriter. This can typically take anywhere from a day to a week.
Pro Tip: If your home inspection finds necessary repairs or upgrades, you can always consider reaching out to the seller and negotiating a lower purchase price based on the findings of your home inspection.
7. Closing on your home
Once you’ve completed your application, provided all the financial information, and had the home appraised and inspected, you’re ready to close the deal.
You’ll finalize any paperwork during closing and take care of closing costs.
Closing costs typically range between three and five percent of the purchase price of your home and can include items such as
- Property transfer fees
- Title insurance
- Inspection or appraisal fees
- Mortgage broker fees
- Attorney fees
Take the first step with GO Mortgage
Buying a home can feel overwhelming at the start. But working with an experienced and knowledgable mortgage lender can help ease the home buying process.
If you’re considering buying a home, refinancing, or have questions about mortgages, reach out to the home loan specialists at GO Mortgage.
We’re here to help you make your dream home a reality.