Buying a home is a major financial decision. Whether you are a first-time buyer or upgrading, the process can feel overwhelming. Here’s a step-by-step guide to help you buy a house.
Step 1: Assess Your Financial Situation
- Check your credit score: Credit scores range from 200 to 850, with scores above 620 deemed desirable for obtaining a mortgage.
When lenders assess your mortgage application, they will review your FICO score. A FICO score is a number that shows your creditworthiness. It is calculated using a special formula based on data from the three main credit reporting companies: Experian, Equifax, and TransUnion.
Improve your credit score with this guide.
- Calculate your debt-to-income ratio: Lenders use this metric to assess your mortgage repayment ability. Ensure your debt-to-income ratio is within an acceptable range to secure favourable loan terms.
- Determine how much you can afford. Understanding your budget helps you avoid taking on a mortgage that may become a financial burden, keeping your monthly payments manageable. Account for additional costs like property taxes, insurance, maintenance, and potential HOA fees.
Step 2: Get Pre-Approved for a Mortgage
A mortgage pre-approval is crucial in today’s competitive market. It shows sellers that you are a serious buyer and helps you determine your budget. Work with a lender to get pre-approved by providing financial documents such as income statements, tax returns, and credit reports. Here’s a helpful link about questions to ask when choosing a lender.
Step 3: Define Your Home Needs and Wants
Make a list of must-have features and nice-to-have amenities. Here are a few examples of must-have list items to consider to help you narrow down your options when searching for homes:
- Location
- Home size
- Outdoor space
- Number of bedrooms and bathrooms
- Proximity to schools and work
- Neighbourhood safety
- Layout, features, and finishes
Step 4: Hire a Real Estate Agent
A knowledgeable and experienced real estate agent like Randy and Heidi can make the process much smoother. They will help you find homes that match your criteria, schedule viewings, negotiate on your behalf, and guide you through paperwork and contracts.
Step 5: Start House Hunting
Work with your agent to view homes that fit your budget and needs. Take notes during each showing, ask questions about the property, and compare the listings to help you make a good decision. Here’s a list of what to look for when touring a home:
1. Overall Condition of the Home
- Look for signs of water damage, such as stains on ceilings or walls.
- Check for cracks in walls, ceilings, or the foundation that could indicate structural issues.
- Test doors and windows to see if they open and close properly.
2. Roof and Exterior
- Ask about the age of the roof.
- Look for cracks in the siding, brick, or stucco that may lead to costly repairs.
3. Plumbing and Water Issues
- Turn on faucets to check water pressure and drainage.
- Look under sinks for leaks, mold, or water damage.
4. HVAC System
- Ask about the age and maintenance history of the heating and cooling system.
5. Kitchen and Appliances
- Ask about the age and condition of appliances included in the sale (oven, dishwasher, refrigerator, etc.).
- Look at cabinets and drawers to make sure they open and close properly.
- Check countertops and flooring for wear and tear.
6. Bedrooms and Living Spaces
- Ensure the layout fits your lifestyle and furniture needs.
- Look for adequate closet and storage space.
- Check natural lighting and ventilation in each room.
7. Neighbourhood and Surroundings
- Listen for noise levels from traffic, neighbours, or nearby businesses.
- Observe street parking availability and overall neighbourhood upkeep.
8. Red Flags to Look Out for in a Home Inspection
- Strong odours, such as mold or smoke, that may be difficult to remove.
- Freshly painted spots that could be hiding damage.
- Foundation cracks wider than 1/4 inch.
Tip: Take photos while visiting each house and focus on the things you can’t change, like location, the neighbourhood, or the size of the bedrooms.
Step 6: Make an Offer
Once you find the right home, work with your agent to submit a competitive offer. This includes your proposed purchase price, contingencies (such as inspections and financing), and a closing timeline. The seller may accept, reject, or counter your offer.
Step 7: Get a Home Inspection
A home inspection is essential to uncover any hidden issues with the property. Hire a professional inspector to check for structural problems, plumbing and electrical issues, roofing conditions, and more.
It’s always a good idea to add a contingency clause to your offer stating that you have a certain amount of time to inspect the property. If any major problems are found, you may negotiate repairs or reconsider your purchase.
Step 8: Secure Your Mortgage Loan
Once your offer is accepted, finalise your mortgage by working with your lender. You’ll choose a loan type, lock in your interest rate, and provide any additional documents required for loan approval.
Step 9: Conduct a Final Walkthrough
Before closing, do a final walkthrough of the property to ensure everything is in order. Verify that agreed-upon repairs have been completed and that the home is in the condition expected.
Here’s a detailed list of what to check for on your final walkthrough.
Step 10: Close the Deal
On closing day, you’ll sign all necessary documents, pay closing costs, and officially receive the keys to your new home. Your real estate agent and lender will guide you through this final step.
Tip: Don’t forget to re-key all the locks and change the garage door opener code when the property is officially yours.
Buying a house is an exciting but complex process. By understanding each step and working with professionals, you can make confident decisions and find the perfect home. If you’re ready to start your home-buying journey, reach out to a trusted real estate agent today!