Ready to buy a home? Here are the 10 steps to budgeting for, searching for, and closing on the home of your dreams. 

Deciding to buy a home, whether it’s your first home or you’re looking to downsize for retirement, is exciting. But, like all major life changes and financial investments, it can also be stressful and feel overwhelming. By breaking the home buying process down into simple steps, you can mitigate the anxiety that comes with buying a home. 
Here are the 10 key steps to buying a home. Simply focus on each step as you reach it and check off your progress as you go.

1. Determine how much you can spend and borrow.

  • Take stock of all your finances—savings, stocks, bonds, loans, monthly income, monthly expenses, and assets. Use this as a gauge to determine how much you can afford to put down and how much monthly mortgage payments you can handle (remember to factor in taxes and insurance). 
  • Find out your credit score and get a credit report. If you need to work on getting your score up, here are some helpful tips to improve your credit score.
  • Use a mortgage calculator to estimate how much your monthly payments will be. You probably don’t know the exact purchase price, loan amount, or interest rate yet, but plugging in different potential numbers will give you a better idea of what to expect before diving in.
  • Settle on a price range that will allow you to live comfortably while making your monthly payments.

2. Search for a mortgage lender.

  • Shop around for the best rates and terms and speak with lenders and brokers to get a better understanding of what mortgage type is best for you.
  • Get a good-faith estimate for closing costs (including taxes and attorney fees).
  • Get preapproved for a home loan. Not only will you have a better understanding of how much you can borrow, many seller’s won’t even consider an offer from you if you aren’t preapproved.

3. Make a list of must-haves.

Your 10-step checklist to buying a home

  • Decide what kind of location and lifestyle would suit you best, whether it’s a bustling downtown area or a remote mountain hideaway.
  • Choose the amount of bedrooms and bathrooms and the general size of the home you’ll need to accommodate yourself and your family.
  • Make a list of essential features. Chef’s kitchen? Backyard? Office space? Two-car garage? Write it down and be prepared for the list to evolve as you start to look at houses.
  • Make sure you distinguish must-haves from features you would like to have. Categorizing features by importance will reduce the headache (and heartache) during the house hunt.

4. Find the perfect agent.

  • Search online for top agents in your area. Ask friends, family, and colleagues for recommendations.
  • Research potential agents’ credentials and read client reviews and testimonials. 
  • Don’t be shy about speaking with several agents and asking them questions to get an idea of whether they’re right for you. 

5. Research your target neighborhoods.

  • Talk to your agent and scan listings for information on average prices, schools, market trends, and neighborhood amenities like parks, grocery stores, cafes, and entertainment. 
  • Search online to find out the crime rates of certain areas.
  • Try to nail down actual streets where you’d like to live. Just picking a city or town in general might not be enough to cater to your specific needs, as neighborhoods can differ widely from street to street. Follow these tips to choose the right neighborhood for you. 

6. Go house hunting.

  • Browse online listings and visit open houses with your agent.
  • Ask your agent to set up private tours of any homes you’re interested in, so you have time to thoroughly look around, take measurements, and inspect the features.
  • Take notes and photos of your visits. After viewing multiple homes it can be hard to remember distinguishing features that set them apart from one another.
  • Tweak your must-have and nice-to-have list based on the types of homes you’re seeing. 

7. Get the lowdown on the finalists.

Your 10-step checklist to buying a home

  • When you’ve narrowed your search down to a few favorites, ask your agent for a list of comps to estimate each property’s fair market value.
  • Try to find out why the seller is selling. It can sometimes help you with your negotiation strategy. For example, if they’re in a hurry to move, they might be more willing to accept an offer under asking price.
  • Consider the additional expenses that will come with the purchasing and owning stages, and ask for copies of recent bills for utilities, property taxes, and any HOA fees.

8. Make an offer.

  • Once you find the house you want, make an offer based on the fair market value.
  • With the help of your real estate agent, make any negotiations necessary and agree on a purchase price.
  • Make sure you include contingencies and any special requests you may have, such as repairs and a specific move-in date, before you sign the purchase agreement.
  • If your offer is accepted, make sure you have enough cash for your earnest money deposit—usually 1 to 2 percent of the agreed price. 

9. Once your offer is accepted, get a home inspection and appraisal.

  • Ask your real estate agent to recommend a certified home inspector, and hire any additional professionals needed for services not covered in a traditional inspection (typically pool, mold, and pest inspections are separate).
  • Refer to this complete home inspection checklist to review with your inspector. You can never be too safe!
  • Get the property professionally appraised, and use the findings to re-negotiate if necessary.

10. Close the deal.

  • Finalize your loan with your lender and make sure you have your closing costs and down payment in order.
  • On closing day, you’ll order a final title search and the property title will be transferred to you from the seller.
  • Many closings now rely on digital documents, which will expedite the process, but you will have to show up in-person to submit your down payment, pay any remaining closing fees, and sign more documents. Your agent will tell you what you need to have prepared.
  • Congratulations, you officially own your new home! Now it’s time to move in and decorate.

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