Understanding the Process of Buying a House

Updated on April 15, 2020
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Kate is a researcher and writer who holds a Bachelor of Science (B.S.) degree from Sonoma State University in California.

Buying a home for the first time might seem overwhelming at the outset, but with some careful planning and research, it can be straightforward and even easy. By taking the proper steps before you even begin looking for a home, you can ensure that you get through the process as easy as possible without any unexpected surprises.

Steps to Buying a House
What's Involved
Step 1 - Decide What You Want
Deciding what is important to you in your future home and where you want to live.
Step 2 - Get Financially Ready
Check credit report, has a steady job (2 years or more), pay down dept, and save a down payment (5%-20% of the home's purchase price).
Step 3 - Get Pre-Approved
Contact a bank or other lender and provide financial records as requested. Receive a pre-approval letter.
Step 4 - Find the Right Home
Look at available homes with the assistance of a real estate agent and find one specific home you want to own.
Step 5 - Put in an Offer
Have your real estate agent write up an offer for the house you've picked out.
Step 6 - Inspections and Appraisal
Complete the required home inspections and wait for the bank to appraise the value of the house. Re-negotiate will the sellers as needed.
Step 7 - Close on Your Home
Sign the paperwork with the title company to take possession of your new home!
The typical process when buying a new home.

Step 1: Decide What You Want and Where You Want It

To begin the process, start your research before you are planning to buy. Take some time to look into what kind of home you want, including the features of the home and where you want it to be located. Consider factors like whether you'll want to grow your family in this home in the future, or if this is only a starter home for you to live in for a few years.

You'll also have to decide if you prefer the maintenance-free lifestyle of living in a condominium or prefer to have your own detached home that you'll have to maintain yourself. If you value living in a gated community, you may be looking at paying a monthly homeowner's association fee to pay for staff and general upkeep of the area.

There may be certain architectural styles and design features that you learn you prefer over others as you get more familiar with them. You can then narrow your home search to include only properties that include the features and styles that you want. Having a good idea of what you want before you begin looking helps you set realistic expectations when you do start looking.

Step 2: Get Financially Ready to Buy a Home

A mortgage is likely to be the largest loan you take in your lifetime, so before getting approved, the bank will want to get a full picture of your finances. Taking the time to get your financial affairs in order can be well worth it, as you may end up getting a lower interest rate and pay thousands less over the life of the loan. It can take six months or longer to improve your financial standing, but the work can help make the process much smoother.

Some of the things you may want to do to increase your chances of getting approved for a mortgage include:

  • Check your credit report to see if there are any negative marks against you that you can try to resolve before applying for a mortgage. Make payment arrangements for any outstanding bills, and make payments on time for current accounts to help build your score.
  • Find a steady job and keep it. If you have a job, try to stay at it for at least two years to show a strong employment history. Mortgage lenders will look at this to determine whether or not you can repay the loan.
  • Start saving for a down payment. In order to purchase a home, a lender will want you to put down an amount of money to show good faith. Most people pay a down payment of between 5% and 20%. The more you can afford to put down, the better.

One of the biggest mistakes new buyers make is feeling like they have to settle. There will always be more houses coming onto the market. If it's not right, wait.
One of the biggest mistakes new buyers make is feeling like they have to settle. There will always be more houses coming onto the market. If it's not right, wait.

Step 3: Get Pre-Approved for a Home Loan

With your finances in order, getting a pre-approval for your loan from a bank is the next step. Even if your pre-approval is denied, this can be a positive thing, as it will help you understand what financial issues you might still need to work on in order to get approved.

When you get pre-approved, you will have a better idea of how much you can spend on a home and what your mortgage payments might be once you move. While the bank is working on a pre-approval for you, you can expect them to ask you many questions and to provide documentation of your identity and finances. This will help them make a decision on what amount to lend you.

Step 4: Find the Right Home

With a pre-approval in hand and a budget in mind, you can start looking for homes that may work for you. You can look for a home on your own, or get the help of a realtor to show you homes that fit your time frame and budget.

Keep in mind as you look that it can take some time to find the right place for you, and you may have to look at many places that don't quite meet your needs before you find the right one. Online listings are a great way to get an idea of how a property might look, but the only way to know if a property really looks like it does in the photos is to go see it in person.

There is no limit to how long you can take to look for a home, but a typical pre-approval lasts 90 days. Once this time frame is up, you will have to go through the process of getting pre-approved again before you can put in an offer on a property you like.

Your home purchase doesn't need to be a stressful process.
Your home purchase doesn't need to be a stressful process.

Step 5: Put in an Offer

Once you have found a home that you want to move into, you can put in an offer for the price you’d like to pay for the home. Depending on the market in your area and how long the home has been on the market, you may choose to offer less than the asking price.

In other cases, if there is competition for the home, you can end up paying more than the asking price to beat out other buyers. The seller will review your offer to see if they want to accept it, and if they say yes, the bank will take some time to review everything and give a final sign off.

Step 6: Get Inspections and Appraisal Completed

The bank will want to conduct an inspection to make sure there are no serious structural issues with the home. During this inspection, an expert will check the home's foundations, roof, windows and other structural elements to ensure there are no serious issues hiding inside the home.

The bank will also require an appraisal to make sure the value of the home matches the price you're going to pay. An appraiser will evaluate the home and values of similar homes in the area to come up with an estimate of what the home is worth, and if it comes in to be much less than your proposed price, you may choose to re-negotiate.

With these pieces in place, you can be sure that your home is a solid investment that will not require major repairs and will live up to the amount you are putting in.


No home is perfect and every inspector will find an issue of some kind, that's their job! Don't let the small revelations bother you. Instead, consider using what the inspector found to negotiate for a better price with the sellers!

Step 7: Close on Your Home

One of the things you and the seller will agree on in the offer is a proposed closing date. This is the date they will move out and you will take possession. Before this date, you'll conduct a final walk-through to make sure that any issues discovered during the inspection were resolved. This is typically done a day or two before the closing.

One the day of the closing, you'll sign off on your mortgage paperwork and the other documents the bank requires to transfer the money to the seller (through the title company). Once this is done, you can walk away with the keys to your new home and move in.

Summing It All Up

The process of buying a home can take some time and patience, but if you plan things out and take it step-by-step, it does not have to be difficult or stressful. Once you have your finances in order and have done the research to find the right property, the rest of the buying process can move swiftly and you can be in your own home much faster than you may realize.

What step of the process are you most concerned about?

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This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.

© 2017 Kate Daily


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