Buying a home: What to expect and how to prepare

When thinking of the home buying process, many may envision something as simple as finding a home, placing an offer, and attending a closing. But, buying a home is a complex process that involves many steps, many of which take place before you even find a home. Below, is an overview of the buying process, including the steps that you should take to prepare for your home purchase.

Determine your budget

Calculate your monthly income and expenses to determine how much you can afford to spend on a mortgage payment while still being able to save for other financial goals. Consider getting pre-approved for a mortgage to see how much you can borrow.

Obtain pre-approval for a mortgage

Contact a lender and provide them with information about your income, assets and debts. The lender will use this information to determine how much you can borrow and what your monthly payments will be.

Select a real estate agent

Choose an agent who has experience working with buyers in your price range and who is familiar with the neighborhoods where you want to buy.

Begin searching for properties

Make a list of your must-haves such as the number of bedrooms and bathrooms, location and price range. Work with your real estate agent to find properties that meet these criteria.

Submit an offer on a property

Once you find a property that meets your needs, work with your real estate agent to submit an offer on it. Your agent will help you determine a fair offer price based on comparable properties in the area.

Negotiate terms of sale

If the seller makes a counteroffer with different terms such as a higher purchase price or different closing date, work with your real estate agent to negotiate until both parties reach an agreement on the terms of the sale.

Sign a purchase contract

Once both parties have agreed on the terms of the sale, sign a contract that outlines all details of transaction, including purchase price, closing date, contingencies, etc.

Obtain title insurance

Title insurance protects against any issues with property’s title such as liens or ownership disputes.

Obtain homeowners insurance

Contact an insurance agent to obtain a policy that will protect your property against damage from events such as fire, theft and natural disasters.

Set up utilities

Contact utility companies to set up services such as electricity, water and gas at your new property.

Obtain an appraisal

An appraisal is typically required by the lender to ensure that the property is worth the amount of money being loaned. An appraiser will visit the property and assess its value based on factors such as location, size and condition. If the appraised value comes in lower than the agreed-upon purchase price, you may need to renegotiate with the seller or come up with additional funds to cover the difference. 

Obtain a home inspection

Get a home inspection done on the property before closing to ensure there are no major issues with it. If any issues are found, you can negotiate with seller to have them fixed before closing or reduce purchase price to account for cost of repairs.

Close on purchase

The final step to complete your home purchase is to attend a closing where all necessary paperwork is signed and the ownership of the property is transferred from the seller to you, the buyer.