For most people, buying a home is the single biggest financial investment they'll ever make. And with a little preparation in advance, the process can be smooth and even enjoyable! This nine-step home buyer's guide gives an overview of everything from inspections to insurance, loan shopping to paper signing.
As a nation, we tend to be people who jump right into things, figuring we can learn as we go. But when it comes to home-buying, taking the time to step back and prepare before shopping for a home can be one of the best decisions you can make.
And if you can take a few steps on your own before you start shopping for homes, it makes the process smoother for everyone – buyers, sellers, their agents, and the dozens of other people behind the scenes who help make the real estate transaction happen.
There are thousands of resources online to help buyers, but one of the best ones comes from the US Department of Housing and Urban Development (HUD). What follows is HUD's basic nine-step process for home buyers, along with some tips and further explanations.
1. Figure out how much you can afford.
Many real estate websites offer financial calculators to help you determine what your loan payments look like with different down payments, interest rates, and terms. It's a great way get an initial estimate from which to proceed.
2. Know your rights.
Because of laws like the Fair Housing Act (FHA), Real Estate Settlement Procedures Act (RESPA), some buyers simply assume everyone involved in the real estate transaction will abide by these laws. Whether by accident or intention, that's not always the case. As a buyer, it's your responsibility to be familiar with the laws, so you'll know if an issue arises.
3. Shop for a loan.
A lot of buyers wait to do this until after they start shopping for a home, and that can hold up the process for both buyers and sellers – and delays don't make anyone happy. Get offers from different lenders, and ask about pre-approval offers, too.
4. Learn about home-buying programs.
Check with HUD.gov as well as your own state government's website to see whether you may qualify for any government home-buying assistance programs.
5. Shop for a home.
Finally, at step five, you get into the nitty gritty. Now that you know your price range and you're ready to get a loan in place, you can start looking at towns, tax rates, schools, and more. HUD offers a very thorough checklist for download on their website.
This is also where you'd enlist the services of a buyer's broker as needed to represent you in the real estate transaction. Don't forget, the buyer's broker is paid out of the selling agent's commission, so it costs you nothing to bring a buyer's broker into the picture.
6. Make an offer.
The listed price isn't necessarily written in stone. Talk to your broker about your negotiating options. Then, when you agree on a price, read through the initial purchase and sale agreement, and discuss any changes you'd like to make with your agent (or a real estate attorney) before you sign.
7. Get a home inspection.
Your inspector should be specifically experienced in residential inspections, allow you to accompany him or her throughout the inspection, and provide a written report within 24-48 hours. Also of value: membership in a professional organization, investment in continuing education, and a series of positive testimonials/referrals.
8. Shop for homeowners insurance.
You need to have this in place and ready to go before you sign the papers, and be able to provide the proof of it. Use the Internet to help you with everything from finding multiple providers for quotes, to getting tips on buying and keeping your insurance costs down.
9. Sign papers.
Generally speaking, the process takes a couple of hours, but you don't want to rush it. So don't put anything else on your calendar for the day you'll be taking legal possession of your new home.
And don't hesitate to ask questions! Some people think because they've gone through so much to get to the signing table, they don't want to do anything that might slow down or jeopardize the transaction at the last minute. But if you're not comfortable with something, or you don't understand something, handle it right then and there.
In fact, that's possibly the best advice for any home buyer – never be afraid to ask questions. No matter what it's about, or whether you think you'll look silly or ignorant because of it, just ask. Buying a home may be expensive, but as the old saying goes, the most expensive thing in life is regret.
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