Buying a home is probably the biggest purchase most of us will make in our lifetimes. It’s perfectly natural to have questions and experience every known emotion during the home buying process.
There’s a lot of work to do, but don’t worry — this home buying checklist will help you roll up your sleeves and get you ready for your closing date in 10 easy steps.
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Use this home buying checklist as a cheat sheet for your entire home buying process: from gathering your documents to applying for a mortgage and finding your dream home. We explain each stage of the process in detail below.
Homeownership can be among the biggest financial decisions that you’ll make. Before you begin visiting open houses, be sure you can afford the purchase price of your dream home.
Most home buyers will need a loan to buy a new house, which requires finding a lender. There’s nothing worse when you’re buying a home than having your mortgage application denied. So checking your personal finances before you begin house hunting is an important first step.
A mortgage affordability calculator can help both first-time home buyers and seasoned veterans understand:
Take some time to consider how your current monthly expenses compare with the results of your mortgage calculator estimates.
Your credit score is an important factor in qualifying for a mortgage and determining the interest rate on your home loan.
Even if you have good credit, double check your credit report and contest any errors.
Paying down any high-interest credit card debt, personal loans, or student loans before applying for a mortgage can also help increase your credit score and lower your debt-to-income ratio.
Once you’ve figured out how much home you can afford, the next step is determining how much of a down payment you’ll need.
FHA loans require 3.5% down, and some types of loans allow you to buy a house with no down payment at all. Government-backed USDA and VA loans let you finance 100% of the home price with no money down.
Regardless of the size of your down payment, it’s a good idea to put aside a little extra to cover closing costs and any repairs that your home inspection might reveal.
Most people take their time with the house hunting phase when buying their dream home. In fact, the average home buying process in the U.S. takes about four months.
During the shopping period, you’ll learn what is and is not important to you for a new home in your price range, which neighborhoods you prefer, and what your deal-breakers are.
Consumer Financial Protection Bureau (CFPB) only considered a single mortgage lender when financing their property. In addition, a significant percentage put off contacting a lender at all until after they found the perfect home.
You really shouldn’t begin shopping for a house until you know how much house you can afford. And if you want sellers and their real estate agents to take you seriously, you need a pre-approval letter.
Keep in mind that pre-approval is not the same as pre-qualification. When you get pre-qualified by a lender, it’s an estimation of what they’ll lend you.
Pre-approval is a more rigorous examination of your financial situation, and it lets you know exactly the loan amount a lender is willing to underwrite.
A real estate agent can be a huge help when buying a home. Not only can agents find homes for sale as soon as they’re listed, agents know the housing market in your area and can provide unique insights that will help you find the perfect home.
In addition, home buyers shouldn’t worry about the cost of a real estate agent.
Many first-time home buyers don’t know this, but the seller almost always pays their own agent and the buyer’s agent. So you can usually get help from a buyer’s agent free of charge.
Once you know exactly how much you can spend, and that you’ll be able to buy any property that meets your lender’s standards, the fun begins. Go shopping. This is the fun part of the home buying checklist, too.
created by HUD, and it does a good job of reminding you to pay attention to the same details for each house you see. As you complete the forms and see more houses, you and your agent should quickly learn what areas and home types are better fits.
Use one for each house you tour, and match it up with any pictures you take. Alternatively, there are several house-shopping apps that allow you to integrate your notes and pics into online files. For every criterion, note if the home feature is a good, average or poor fit for you.
Hiring a real estate lawyer isn’t always a necessity, but some states require an attorney to represent you. Your agent or realtor can tell you if one is needed.
If your state does require a real estate attorney, avoid choosing the cheapest service you can find. Treat this process similar to how you would select a lender or an agent — get recommendations, read reviews, and speak with several options before deciding.
When you’ve found the perfect home, it’s time to make an offer. Your real estate agent or Realtor will guide you through the process, and in many cases, take the lead.
Once the seller has accepted your offer, you’ll begin the formal mortgage application process.
Even though you’ve been pre-approved for a loan, expect to provide additional documentation to your loan officer as the underwriting process progresses.
Mortgage lenders simply want to make sure that you can afford your home loan and that you are likely to repay it as agreed. They must comply with government regulations requiring them to prove that they have evaluated you lawfully.
For a full breakdown of all paperwork, download our home buying checklist.
Your lender may require you to get homeowners insurance as part of the approval process. Even if they do not, it’s a good time to get quotes from your insurance company, or shop your homeowners insurance policy around with a few providers to get the best deal on coverage.
After you’ve reached an agreement with the seller on the purchase price of the home, the next step is scheduling the home inspection and appraisal.
The home inspection will ensure the property is up to code and that the foundation and roof are structurally sound. Your home inspector will test systems like plumbing and electrical and provide you with a detailed report with the home inspection results.
Congratulations, the closing process is the final step to homeownership! Your real estate agent and loan officer will take care of most of the work, but you will have a few final tasks — including signing mountains of paperwork.
Once you’ve studied the home buying checklist, you’re ready to get the ball rolling.
Start with an overview of today’s mortgage rates to find out what you can afford.