Harbaugh Real Estate

Buying a Home in 10 Simple Steps

By Meghan Thrasher

When it's time to look for a home, here are the steps you need to take.

a small toy red house in a magnifying glass

Step 1: Check your credit score

The first step you should take towards buying a home is a credit check. If you plan to obtain financing through a lender one of the first things they will do is run an extensive credit check and balance that against your debt to income ratio. Before you jump in feet first, you need to know if your credit score is within range to qualify for a mortgage. You will want to check your score against all three top credit bureaus to make sure you have an accurate number. Understanding your credit score and where it needs to be in order to qualify for lending can give you an idea of how prepared you are for all that buying a home entails. Take the time to get your credit score within the right range before buying, it makes all the difference! Some lenders will accept scores as low as 580 however, most generally accept upwards of 650 given that the rest of your debt to income is within an acceptable range.

Step 2: Figure out how much you can afford

Before meeting with your lender it may be helpful for you to know exactly how much house you can afford on your own. Lenders will let you know the amount of money you qualify for, but you want to avoid overextending yourself. Typically, it is recommended that you spend no more than 30% of your gross monthly income on housing costs. These costs would include the principal, interest, taxes, insurance, and association dues.

Step 3: Get Pre-Approved by a lender

There are usually variations in mortgage qualification guidelines such as interest rates and closing costs between lenders. It is essential that you shop around before choosing a single lender to move forward with your loan. When comparing lenders, be sure to ask each one to provide a Loan Estimate. A pre-approval is helpful because it tells you what the lender is willing to offer you along with the costs of obtaining the loan. This form also makes all the difference when you find yourself in a bidding war. It shows the sellers that you are a serious buyer with the ability to obtain the necessary funds to purchase the home.

Step 4: Get a Real Estate Agent

Your real estate agent will represent you throughout the home buying process to ensure you find the right home, ask the important questions, make an appropriate offer, and have the power to negotiate and receive the necessary disclosures.

Step 5: Search for a home

You’ll find that the more houses you see, the more they all start to blend together, so be organized and make sure you walk through the various things you like and dislike about each property with your real estate agent. When visiting a listing, take notes and reflect on the house itself and the surrounding area. You can read more about how to best search for a home and begin looking on the Search page.

Step 6: Make an offer

When you find a home you want to buy, it’s time to begin the process of making an offer. Ask your real estate agent to run a comparative market analysis to determine a fair price based on recent sales of similar homes in the area. The less interest there is – and the longer the house has been on the market – the more power you’ll have to negotiate. Beyond the price you plan to offer, you should speak to your real estate agent about whether it makes sense to include any contingencies in your offer. A contingency is a stipulation included in an offer that states that the buyer is free to break the contract without any repercussions if a particular condition is not met. Although sellers sometimes balk at offers made with contingencies, some contingencies are worth making regardless of the seller’s feelings about them.

Step 7: Get an inspection and appraisal of the home

The home inspection is important, as it will identify areas where major repairs or renovations require immediate attention as well as any work that needs to be completed in the future. Be sure to hire a professional, third-party home inspector to examine the home you’re preparing to buy. At this point in the process, your lender will require the home to be appraised before they agree to release any funds. A home appraisal estimates how much a home is actually worth based on comparable sales in the area, market trends, public records, and a comprehensive inspection of the property.

Step 8: Get Home Insurance

Also in your best interest is homeowners insurance, which works as a safety net to protect your home and finances. Although homeowners insurance isn’t legally mandated, most lenders will require you to have