5 Steps to Buying a Home: Home Buying Process Explained

Steps to buying a home

While buying a home can be a daunting process, there is plenty of help to assist you along the way. There are a lot of moving parts in today’s real estate market so most homebuyers hire knowledgeable professionals – agents, lenders and appraisers – to assist them in this exciting yet challenging endeavor. While professional assistance is key, personally understanding the purchasing process is just as important. Americans will move nearly a dozen times in their lifetime and equipping yourself with the following information is essential to your success as you search for your next home:

1. Prepare Yourself for Ownership

Do you want to buy a home? If you answered yes, this is just the beginning and knowing whether you are prepared for homeownership will take just a few more questions! In Washington, D.C., the median home price is around $540,000. That means, with a credit score between 740 and 759 and a down payment requirement of 3.5 percent (assuming you’re getting an FHA loan), your down payment will be $18,900. Ask yourself whether you have enough saved up to cover that, or if you qualify for down payment assistance. You should also ask yourself whether your credit score is high enough. You can find out the answers to these two questions relatively easily by talking with the right person. Go to a bank and see if you can get pre-approved for a mortgage before you get your hopes up on a home.

2. Equip Yourself With a Professional

Last year, 87 percent of people purchased a home through a real estate agent. They did it that way because it’s the smart thing to do (and it doesn’t technically cost you anything). Traditionally, sellers pay the commission for both the buyer and the seller. Mine your friends and family and co-workers (anyone you trust, really) for a referral. And when and if you hire an agent, you’ll also be effectively hiring their professional network: lenders, builders, attorneys, etc. Utilize that network as often as possible.

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3. Find Your Home

This is the fun part! To find your dream home start by making a list of your specific needs and organize them in order or importance listing the most important first. It might look something like this:

  • I have to live near a metro stop.
  • There needs to be a good school nearby.
  • I need to be 5-10 minutes from downtown.
  • There needs to be a body of water within walking distance.

Your priorities may very well differ from the ones listed above but once you’ve organized them in order of importance, give them to your agent so they can identify suitable options.

4. Get Your Mortgage and Make an Offer

With a pre-approval, financing your chosen property (i.e., your dream home) is as easy as contacting your mortgage broker. If you’re working with an agent, it’s likely they’ll have a trusted lender you can go to. With your financing secured, it’s time to make an offer. But don’t let excitement overcome due diligence. Before you offer anything, ensure the property has been inspected and the title insurance has been bought. When you make a bid, do so with the expectation that you will have to make an eventual counter offer and understand that not every offer ends in a sale.

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5. Protect Your Investment

Remember that your home is an investment – probably the biggest of your life; this is why you need to insure it. Depending on where you live, that responsibility may extend beyond basic homeowner’s insurance. For instance, your home may have been built on a floodplain. Check here – and if it is, get flood insurance. Or it may have been built in an area prone to fires or hurricanes – whatever the case, properly insuring your home will help to protect it.