Step by step to buy a house

Buying a house in the United States involves a series of well-defined steps. Here’s a comprehensive guide to help you through the process.

Assess your financial situation

Check your credit score and improve it if necessary; normally the banks prefer a credit score of 700 or higher.

Check your savings. Your savings ensures you have enough for a down payment (usually 20% of the home's price) and closing costs (about 2% to 5% of the loan amount).

Check your current and future income. Lenders prefer a debt-to-income ratio (DTI) below 36%, with 28% or less of that going towards your mortgage payment.

Get pre-approved for a Mortgage

Obtaining a pre-approval letter shows sellers that you're a serious buyer.

Shop around to compare rates and terms from various lenders.

Gather necessary documents like tax returns, employment history, pay stubs, and bank statements.

Define your criteria

Location: Decide on the neighborhood or area you want to live in.

Home Type: Choose between a single-family home, townhouse, condo, etc.

Must-Haves: List your requirements like the house size, number of bedrooms, bathrooms, yard size, garage space, etc.

Find a professional and experienced realtor

An experienced realtor will guide you through the entire process, helping you navigate the local market and find properties that fit your needs.

Sign a buyer’s agent agreement if necessary.

Start House Hunting

Use websites like Zillow, Realtor.com, Redfin, Trulia, RE/MAX, Coldwell Banker, Century 21 as well as information from your real estate agent.

Visit Open Houses or schedule Tour Homes.

Once you've found your dream home, it's time for negotiations.

Your agent will help you determine a fair offer price based on recent sales of similar homes (Comparative Market Analysis) in the area.

Your agent will submit the offer to the seller's agent. Once the seller accepts your offer, your lawyer will work with the seller's lawyer to finalize the contract.

Home Inspection and Appraisal

After making an offer and signing all necessary paperwork, it's time for your lender to perform a final inspection of the property. This is done to ensure that no major issues have arisen since your initial offer was accepted. If issues are found, talk with your agent and lawyer for a negotiation for repairs or a credit at closing with the seller. During this time, the lender will require an appraisal to ensure the home's value matches the loan amount.

Finalize the Loan

In this step, the bank asks you to provide any additional documents the lender requires. Example for additional documents include bank statements, letter of intent if you are selling your current house, paystubs, copy of W-2, employment history to satisfy the 2-year work history requirement at the time of loan application, house insurance commitment. Some banks require you to become their member prior to be cleared for closing.

Once everything is in order, you'll receive a formal loan approval.

Closing

Before closing, carefully review all closing documents, including the Closing Disclosure, which details your loan terms and closing costs. At closing, Sign the necessary documents, pay your down payment and closing costs, and receive the keys to your new home.

Post-Closing and Move In

Before moving in, set up or transfer utilities, internet, and other services to your name. Don’t forget to notify relevant parties of your new address (DMV, USPS, Banks, subscriptions for delivery, etc.). Finally, plan and execute your move into your new home.

Additional Tips

Stay Organized: Keep all documents and communications (emails, texts) in one place.

Stay Within Budget: Avoid stretching your budget to avoid financial strain.

Future Planning: Consider future resale value and neighborhood growth potential.

Congratulations on your new home!