How to Purchase a Home: A Step-by-Step Guide

You've found a home you love and you’re ready to stake your claim. For most buyers, purchasing a home can be a confusing and daunting process that extends over several months. But don't let intimidating factors like loans, inspections, and competitive offers keep you from moving forward. Buying a home can actually seem simple once you’re armed with an understanding of the process and expert advice. 

Once you start shopping for a house, take some time to consider how homeowners insurance will factor into your budget. You'll need this coverage to protect yourself against various losses including property damage and theft. An independent insurance agent in your area can help you get set up with this coverage. However, first, we've outlined a step-by-step guide to buying a home to walk you through the entire process.

7 Steps to Buying a Home

Step 1: Find a Realtor

The process begins with finding a trustworthy realtor, not a real estate agent. Realtors have more requirements, additional training, and education. As such, they can provide you with more insight and advice than real estate agents. They're also required to follow a Code of Ethics dictated by the National Association of Realtors to ensure they’re acting in the best interests of their clients.

Realtors, unlike real estate agents, disclose all known fees upfront, so you don't end up with unexpected costs. Real estate agents may not offer the same courtesy and tack on hidden fees. No one needs potential additional stress when buying a house, especially first-time buyers.

Since your home will be a huge asset in your life, you'll want to be sure to find a knowledgeable and trustworthy realtor to help you with such an important process. Here are some tips to keep in mind when selecting your realtor.

Do:

• Get a referral from a friend: Friends and other trusted sources who have already worked with a realtor can help point you in the direction of someone who's proven to offer reliable services.
• Get a full-time realtor: They may have more experience and wisdom to share with you than their part-time counterparts.
• Get an experienced realtor: When shopping for your home, it can benefit you to work with someone who's been helping clients for many years.

Don't:

• Work with a part-time realtor: Experience and expertise are the main factors you want to look for in a realtor, and full-time realtors will likely have more of these to offer.
• Make your selection from a website: Realtors who appear on websites have likely paid to be in the top results, which may not actually indicate reliability. 
• Work with anyone you're hesitant about: If any reservations arise while initially speaking with a realtor, trust your instincts. It's worth it to keep looking until you find help from a professional you really trust.

Working with a great realtor can make all the difference in the home-buying process. Don't skip or speed through this critical step.

Step 2: Get Pre-Approved for a Loan

Unless you’ve amassed huge savings or recently come into a large inheritance, chances are you'll need a loan. Your realtor or friends may have recommendations for a lender who could work with you, or your own bank may offer loans. Just as with your realtor, it's essential to be comfortable with your lender. A good lender should care about your unique financial situation. If, on paper, you can afford a $200,000 loan, but you know that realistically you can actually only afford a $100,000 loan, your lender should be sympathetic to that. Do your research and shop around to determine what you know you can afford, and don't let yourself be nudged into more than that.

You should also consider your credit score when applying for a loan. Keep in mind that lenders may have to perform a hard inquiry when checking your credit, which can temporarily decrease your credit score. Here are the average credit score ranges and how they impact your chances of getting approved for a home loan.

Step 3: Schedule a Property Showing

After securing your realtor and loan, it's time to do a walkthrough. During a property showing, you can spot things that would be impossible to catch in the virtual tour. Here are some things to keep in mind about property showings and in-person tours.

• The seller or real-estate agent will not be there: You should be able to view the house solo after the buyer agent unlocks it for you.
• Walk around without feeling pressured: This will allow you to determine if you can envision yourself living there. The buyer agent should respectfully remain quiet during this part.
• The buyer agent will go through property details: After you've had your viewing, the buyer agent will give you specifics of the property, such as whether the stove is gas or electric.
• Details about the neighborhood should be disclosed: The buyer agent should inform you about the unique quirks of the neighborhood surrounding the property.
• Details about local crime and schools will not be disclosed: Here is where the buyer must do their own research. It’s illegal for your realtor to talk about crime in the neighborhood you're eyeing. For one thing, realtors hope that neighborhoods will continue to experience turnover, so what is deemed safe or unsafe now may not remain that way for long.  

Before the next step, it's a good idea to review the local housing and redevelopment authority, if one exists, to determine if there are any local ordinances you should be aware of. If you're purchasing a condo, it's also wise to research any hidden fees that you may incur after you've moved in. Certain condos also don't accept every type of loan, so plan accordingly.

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Step 4: Write Your Offer

If you're satisfied with the property after viewing it in person, now it’s time to make an offer. Rely on your realtor to put together a thorough analysis of the property. They’ll check local comps, determine an estimated value range, and add in any desired inspection fees. After this is complete, write your offer for the home and act quickly. Depending on the market, there may be a lot of competition, leaving you without any time to waste.

Step 5: Schedule Inspections

You can schedule as many home inspections as you'd like, but the seller may not be patient with you. Their objective is to close the sale, and if another buyer is ready to go, they might not wait for you to make a final decision. Here are the critical components of the home to inspect.

1. Basic structural/mechanical: Inspectors will turn on all appliances and review the basement, walls, floors, and other areas for deficiencies and other issues. 
2. Mold: Air samples are taken for these inspections. Conducting a mold inspection can help protect the health of you and your family. 
3. Lead-based paint: Homes built before 1978 have a higher likelihood of containing lead-based paint, so it's essential to conduct an inspection if your home was constructed during this period. Lead-based paint is another home feature that can lead to serious health issues. 
4. Environmental: These inspections check for the presence of asbestos, underground oil tanks (and, if found, verify that they're not leaking), and radon. These inspections are required in some, but not all, counties.
5. Chimney: These inspections ensure the chimney is in proper working order and that your house won't come with any unexpected tenants, such as squirrels and other rodents.

Order an inspection for any aspects of the home you're interested in learning more about. A professional inspection can help alleviate your concerns or identify areas that require further attention before you make a final offer.

Step 6: Make a List of Concerns for the Seller

It's time to construct a list of your concerns and requests for the home's seller. Mention any safety concerns uncovered by the inspections and any other issues that don't meet your standards. The seller should address and take care of your safety concerns. However, more personalized requests aren't likely to be taken seriously.

Step 7: Settlement 

Next comes a waiting period of about 30 to 45 days for a contract to be drawn up after you've written your offer. But once it's complete, the seller will hand over the keys to you, and you can move into your new home. The title of the property will be transferred to you. However, before the excitement overwhelms you, consider scheduling a final walk-through. 

This can help you ensure the property is still in the same condition as when you made your offer. This step is essentially the process of validating your contract. If you discover any new issues, don't hesitate to point them out before you start unpacking.

Home, Sweet Home

The entire home-buying process typically takes between two to three months on average. For many people, this can be a long time to wait. However, the end result can be more than worth it if you find a property you love. You'll have the satisfaction of completing one of the more major processes you've likely ever been through, and in the end, you'll be living in your new home.

Don't Forget Your Homeowners Insurance Coverage

When going through the home-buying process, make sure not to forget the homeowners insurance. An independent insurance agent can help you protect your home and its contents with the right policy. They'll shop and compare coverage for you from multiple carriers and present you with a handful of quotes. Your agent will find any discounts you qualify for to help reduce the cost of your premiums as much as possible. And down the road, they'll still be there to help file home insurance claims and update your policy as necessary.