Buying a home is such an exciting milestone, but it can also feel overwhelming if you aren’t sure where to start.
You know you’ll be looking at houses, putting in offers, and securing a mortgage. But what else goes into buying a home? How long does it take? What do you need to know and do between house hunting and moving in?
Make Sure You’re Ready
Before you buy a house, you’ll need to assess your needs. Make sure you know how much home you can afford and that your finances are stable enough to purchase. Plan for your down payment and closing costs, moving costs, and other cash outlays you may need to make when you move in and get settled.
Go over your credit to see if any blemishes could prevent you from qualifying for the best mortgage. For more on the work you need to do to get ready to buy a home, read “Your First Mortgage.”
Pull Together Your Team
Buying a home is a group affair. You’ll need a loan professional to go over your credit profile, help you understand the mortgage process, and get you pre-approved for a mortgage. This final step is crucial because you will know how much you can borrow for a home, and the sellers you encounter will have the assurance that your mortgage is likely to be approved. It is wise to put off other large purchases once you begin the pre-approval process. You don’t want your financial situation or credit profile to change dramatically between the time you get pre-approved and the time you finalize the mortgage, as that can slow down the process.
And you’ll want a real estate agent to help you find the homes that fit your needs and budget. We recommend using a licensed real estate agent. You can search the Department of Commerce and Consumer Affairs website to ensure your agent is licensed and see any complaint history.
From start to finish, the process of buying a home may take 3–6 months, depending on how long it takes to find the right home. The loan process takes 30–60 days.
As you progress through the process, you’ll also work with an appraiser, an inspector, and a title and escrow company.
Find Your Dream Home (or a Good Starter One)
Once you’re pre-approved and have a good realtor, it’s time to start looking at houses. Your realtor will ask you many questions about what style of home you would like, where you want to live, and what your price range is. Then, they’ll come back to you with a list of homes that might work. The realtor will set up times you can visit the homes to see if they are really what you’d like.
After you’ve picked the homes you want, your real estate agent will help you present offers to the sellers. It can be a good idea to submit multiple offers in a tight real estate market since sellers are choosing among many offers. When real estate sales are slow, you may choose to make one offer at a time. Your real estate agent will be able to give you advice about what to expect once you submit the offers and will handle the communication with the seller’s agent. Once you submit an offer, it can be a waiting game, depending on how many other offers the seller has.
You may also need to negotiate an offer, so be ready to discuss different scenarios and price points.
Finalize Your Funding
Once a seller accepts your offer, you’ll work with your lender to complete the mortgage process. This step will likely go smoothly if you haven’t had any significant changes since your pre-approval, but you may need to provide further documentation. Stay in communication with your loan officer so that you can provide any additional information quickly.
Your loan officer will also likely coordinate the title and escrow process. When you purchase a home, you have the title history checked to make sure that the seller can legally sell the home to you. You will also pay a good faith deposit to show that you are fully prepared to buy the home. The bank will hold this money in a third-party escrow account until the sale is final.
Fully Assess the Home
Besides vetting your finances, your lender will need to ensure that the home you’re buying is a worthwhile investment. This point is when your home inspector and appraiser come into the process.
Your home inspector will be looking deep, assessing how solid the home is, and pointing out any potential safety hazards, such as mold or lead paint, and structural issues, such as cracks in the foundation, rot, or roof defects. Once you get your home inspection, you can request that the seller make repairs before finalizing the mortgage. If the seller doesn’t make those repairs, then you will be on the hook for completing them after you take ownership. If you prefer to oversee them yourself, you can request a credit on the purchase price.
The appraiser will look at the home to assess its market value. They will see what improvements the sellers made and compare the home’s features to similar homes to decide what the home is worth in the current real estate market.
Give It One More Look
Once the seller has completed repairs, you should do one more walkthrough of the house. You can inspect the repairs to make sure they meet your standards, check for any items the seller has left behind, and make sure everything is working.
Sign the Papers
Now is the fun part: signing the papers of ownership for your new home. This final step is called the loan closing, and it may be done in person or electronically.
You will have a chance to review all the papers before you sign them, and it is essential to do so. Make sure your mortgage terms and closing costs match what you agreed on, that the title is free and clear and ready to transfer to your ownership, and that you and the seller have fulfilled and signed off on all conditions. Be prepared to transfer your down payment and portion of the closing costs at this time.
After you sign the papers, you will receive the keys to your new home. It’s all yours. You’re ready to move in to home sweet home!