Do you know what to do before buying a house? If you’re a first-time homebuyer, be warned: There’s a lot to remember, and we know how challenging it can be trying to make sure you have all of your ducks in a row.
Don’t worry! We got you covered. We’ve created a checklist (of sorts) to help you remember what to do before buying a house. (Heck, you may even want to print this article for future reference.)
What to do before buying a house
1. Determine if this is the right time to buy
You have to be objective and evaluate your situation because you don’t want to get in over your head when there’s no need for that future stress!
Jeremy Smith, a top-selling real estate agent in Austin, Texas, with 17 years of experience, says that when mortgage rates are low, loans are inexpensive, and it can be a good time to buy — but there are always other factors to consider, too:
“You would have to look at various factors in your life, like job security and advancing in your career.”
2. Create a list of what you want in a house
It’s fun to imagine all of the features you want in your new house, but as the Rolling Stones said, “You can’t always get what you want.”
Let’s say a finished walk-out basement and brand-new appliances are among the top things on your list, which is fine and well.
However, you need to consider that these things typically increase the value of the home and could price a property outside of your budget range. Creating a list of features you want (and features you really can’t live without) will help your agent find houses that best fit the criteria and help you determine what you can improve after moving in.
3. Research the market
After deciding that this is the right time to buy a house and you’ve created your wants list, you must do a little research into the real estate market in the desired area.
This is why an experienced real estate agent will become your new best friend. The agent will be able to explain how the market is doing in terms of home inventory and prices. They’ll be able to walk you through various contingencies, how to handle a situation where there are multiple offers on the house, and they’d also be able to tell you if it’s a seller’s market or a buyer’s market.
When you’re speaking to an agent about the market, some questions you might want to ask include:
- What kind of amenities, attractions, or resources are available in the area?
- Is the neighborhood safe?
- How competitive is the market?
- What is the local economy and job market like?
4. Spend some time in your desired neighborhoods
A neighborhood may look good when you drive through it, but to determine if it’s the right one for you, then you need to spend some time in the neighborhood.
Hang out at local coffee shops, the library, the parks, and other places. Chat with the residents and ask their thoughts on what it’s like to live in the neighborhood.
If possible, rent a room or an apartment for a week or two in your neighborhood of choice, so you can experience it night and day, weekday and weekend, before you decide to live there.
5. Check your credit score
Your credit is incredibly important when you’re applying for a loan because it indicates your creditworthiness to lenders and plays a big role in how much interest you’ll pay.
We recommend that you check your credit report and monitor your score regularly prior to applying for a loan.
6. Consider seeking help to repair credit, if necessary
If your credit score needs some work, speak with a financial advisor to see how you can boost your score.
Heck, the easiest way you can start is to make sure you’re making all of your minimum payments on time!
7. Estimate how much money you need for closing costs
As a buyer, you’ll be responsible for closing costs that will need to be paid on closing day, so you’ve got to make sure you have enough money saved to do that.
We have a useful closing cost calculator that will give you a ballpark idea of how much you need to save.
8. Get estimates associated with moving into a new house
Not only is buying a house expensive, so is moving into one!
Along with closing costs, you’ll want to have money saved for things like turning on the utilities, hiring a moving company (or to rent a moving van if you’re moving on your own), buying new furniture, renting a storage unit if needed, and other expenses.
9. Figure out your shopping budget
After you’ve weighed up all the possible expenses, it’s time to take a close look at your finances and figure out what you can comfortably afford to spend on a house before you start shopping for one.
You can use our house affordability calculator to get an idea of how much house you can afford.
10. Weigh your options regarding loan type
There are several different types of loans you could apply for. Do a little bit of research to find out which ones you may qualify for because each loan has different eligibility requirements, and some have additional program fees or expenses.
Loans typically fall into two categories — conventional, and government-backed loans, such as FHA, VA, and USDA.
Conventional
Conventional loans are offered by private lending institutions and banks. These loans are not backed or guaranteed by any government agencies. The lowest interest rates are typically offered to buyers who have a 20% down payment and excellent credit (740 and above).
Government-backed loans
Government-backed loans include FHA loans, USDA loans, and VA loans. Although each of these loans have slightly different terms and requirements, they are designed to help make mortgages accessible to more buyers. .
11. Compare lenders to find the best fit
You don’t go with the first lender you pick out of the phone book! Take some time and do some research on a few lenders, as some lenders may offer better interest rates, or quicker closing times.
12. Get preapproved for a mortgage
Once you’ve found a lender, now you need to get your preapproval letter.
This document will outline how much home you can afford — sometimes it’s more than your estimated budget, and sometimes it’s less. That said, it’s usually not a good idea to shop at the very top of your budget.
13. Find a real estate agent
Your real estate agent is going to be your go-to person for everything during this process. You need to find an agent who has a good reputation, lots of experience, and who makes you feel confident that they’ll work with your best interest at heart.
14. Start the house hunt
Now the fun can really begin! Your agent will show you houses that meet your budget and your needs, but you can also ask to see any houses you’ve found on your own that you’re interested in seeing.
15. Tour houses in different types of weather
People always want to see houses when it’s nice and sunny, but you should be willing to look at houses in different types of weather if at all possible.
For example, if you see a house when it’s rainy, you can look for leaks. If you see a house when it’s cold or snowing, you can check for drafts around the windows, doors, where plumbing enters the house, and air ducts.
16. Make sure listing details are correct
It’s important that when you’re going to see a house that the listing details match what you see. Examples of incorrect listings could say there are three bedrooms, but one of the rooms is a glorified closet — or the listing says stainless steel appliances are included, but all you find when you open the utility closet are outdated appliances that have seen better days.
17. Be open to reconsidering your wants and needs
After you’ve seen a few houses and have gotten a sense for how much your money can buy, it could be time to reconsider what features you are looking for in a house.
Maybe instead of a finished basement, you can settle for a basement that you could finish in the future?
18. Research homeowner’s insurance options
You don’t have to go with whatever insurance company is recommended to you. Shop around and look for homeowner’s insurance companies that offer the best coverage at the best rates.
19. Study the FEMA floodplain maps for your neighborhood
While you’re looking at homeowner’s insurance options, you will also want to study the FEMA floodplain maps. Why? Well, you’ll need to see if you’ll be in a flood zone so you can get the appropriate insurance, as well as make sure your house is properly zoned.
20. Request permits for any large home renovations
If you’re thinking about doing a large renovation no matter what, you may want to start the process of requesting permits for the type of renovations you’re hoping to do early on.
This isn’t a must-do, but remember: If you drag your feet on permitting until you have the keys in your hand, you could be waiting for weeks to get going!
21. Review HOA rules and regulations, if applicable
If you’re moving to an area where there’s an HOA (homeowner’s association), you’ll need to familiarize yourself with the rules and regulations prior to moving in. You don’t want any violation notices because you overlooked one rule or another.
22. Get a home inspection
Don’t skip the home inspection! The home inspector will go through the property to look for repairs that need to be made, structural or foundation issues, and more.
Trust us: You don’t want to waive your rights to a home inspection only to discover the roof needs to be replaced or the plumbing in the kitchen floor under the sink is rotting.
23. Determine whether you need specialized home inspections
There are some instances where you may want to look into getting other types of home inspections.
We have an extensive breakdown of what specialized home inspections are available and the circumstances when you’d want to do them.
24. Get a home appraisal
Your lender will also require a home appraisal so they aren’t lending more money than the house is worth. Ultimately, the home appraisal is for your benefit because it’ll protect you from paying more for a house than it’s actually worth.
25. Buy title insurance
Title insurance protects you and the lender from any possible future ownership claims to the property. This could include filing errors, undisclosed heirs, and forgeries. It’s not required, but it’s a really, really good idea.
26. Negotiate repair requests or credits
After the home inspection is complete, you now have the ability to negotiate with the seller depending on what the inspector found.
You can ask them to lower the price, ask them to repair or fix any problems, or request that they give you the money to have the repairs done yourself (also known as a credit).
27. Ask any questions you may have
If you have any questions, don’t hesitate to ask them! Your real estate agent will answer your questions to the best of their ability.
That advice applies from the time when you’re going on a home tour all the way up until closing day — don’t be afraid to ask! This is a huge purchase, and you want to be 100% certain you know what you’re getting into.
28. Don’t ding your credit
From the time you get your preapproval letter until the keys are in your hands, you do not want to make any big purchases that will affect your credit!
If your credit takes a hit and drops significantly, the lender may see that and change your interest rate, or they could deny your loan entirely. Not good.
29. Get the clear to close
Clear to close means you are one step closer to being an official homeowner. A clear to close means you meet all the conditions and requirements necessary to get to the closing table; all closing documents have been signed, and you’ve secured your mortgage. The only thing left is to close!
30. Schedule a final walkthrough
The final walkthrough is your final chance to make sure everything is in order. You’ll get to make sure all of the agreed-upon appliances and fixtures are still in the house. You can double-check the basic functions of the house (lights work, plumbing is good, the HVAC runs properly), and to make sure repairs (if any) have been made.
You can read our full list of things to look for during a final walkthrough here.
Don’t forget what to do before buying a house!
Buying a house is an exciting time, to be sure. In all that excitement, some things may fall through the cracks, and you may not remember what to do before you get down to the business of actually buying the house.
If you’re worried that you will forget something, refer back to our guide along the way. You’d be surprised by how much having a comprehensive list can help ease the stress that can come with the house buying process!
Header Image Source: (Daniel Bosse / Unsplash)
