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Steps to Buying a House for the First Time

Steps to Buying a House for the First Time

For people who wish to buy their first home, a brief yet comprehensive elaboration on the process to buy a house has been provided here. To know more, read on.
WealthHow Staff
Buying your own house is a big step in your life, and of course, you want it to be perfect. Here are a few steps to buying a house for the first time, which would help you out in the process. Escalating real estate prices have changed the way in which real estate, especially homes are purchased.

Home loans, mortgages and real estate loans have become the common aids to buy homes. This has caused the process to become quite time and money consuming, and more over very lengthy, complicated and frustrating. In the following paragraphs, appropriate steps to buy a house, have been discussed. These steps will basically help you to complete the home buying process much more quickly and easily. So here it goes...

What are the Steps to Buying a House?

Apart from the following steps for buying a house, there are several other aids, resources and articles on Buzzle, which would help you out in the process of buying a home. Here are some brief steps which you can execute...

1. Research and Analyze: When you take a decision of buying a house, you need to be prepared for a lot of hard work and a lot of patience. The first step that you will have to take up is of research and analysis. This step is extremely important as it helps you in getting to know the real estate market. Here's a list of what you would need to find out over a period, about a year or so:

i) Different real estate prices in different regions of the locality in which you live.
ii) What kind of house would be great for you, a suburban home, apartment, farm-house, ranch, etc.
iii) Mortgage prices, installments and the interest rates applicable as per your credit ratings.
iv) Projected prices of the real estate that you plan to buy.
v) Tax and legal procedures of the purchase.

These are some of the important points to remember when buying a house. Now the reason that you need to conduct the research throughout a year or so is, that the real estate market is a dynamic one and there are several prices and related changes that you need to become aware of.

2. Set Right Your Finances and Score: The next step which can be parallel to step one is to get your finances in order. This involves, increasing the credit score, paying off all pending debts and reducing the amount of liabilities to the bare minimum. This is necessary due to the fact that you cannot have too many liabilities and a poor credit score when you get a home mortgage. Financially, it would put you under too much burden.

3. Hunt the Real Estate Market: The next step involves actually contacting real estate broking firms and agents, and starting to have a look at all available houses. During this process, make use of all the research that you have done in the first step. It would help you to finalize or zero down on good potential properties. Also note that auction like bidding, which will inflate the cost of the property is not very healthy and would not work to your advantage. Hence, just take a good look around and do not bid.

4. Get a Pre-Approval: The next step is the most important one on your, buying a house checklist, and it involves getting a pre-approval. This approval is basically a quasi-approval, but is legally binding, as it involves the lender's sanction as if you are applying for a mortgage loan. After the pre-approval process, the lender will hand over a quotation for the loan. This quotation is principally based upon your income, credit score, potential properties, your credit history and whether you have the credit score needed for the mortgage. The quotation will depict the interest rate, maximum amount that you can borrow and lastly, the installments that you will need to pay on a monthly basis.

5. Calculate: After you get a pre-approval quotation, you will need to calculate some things such as how much percentage of your income will be dedicated in the installment of the loan, or will you be able to afford other debts, or how is the projection of your source of income. In this step, note down all significant doubts, possibilities and think about entire transaction as you will be dedicating about 15 to 20 years of your life repaying this mortgage. Among all the important things to know when buying a house, getting the exact figures of what you would owe is extremely important.

6. Reconsider and Conclude: The next step is to consult your lawyer and accountant for appropriate advise. Ask them all the doubts that you have, seek alternatives and get their personal advise. Similarly, also consult your lender and ask for advise and request all possible alternatives and probabilities. You will also need to rule on probabilities such as foreclosure, bankruptcy or short sale. Then think about the entire deal and talk with your spouse, get advise from parents and other family members, it will prove to be highly valuable. Finally, after giving it a lot of thought and time, conclude.

7. Sign the Documents: This is the last but the most crucial step in the entire transaction. After you have concluded, get the loan approved and purchase the property. You will have to pay the closing costs and down payments while concluding the process.

This checklist for buying a house needs to be strictly and smoothly followed to ensure that the transaction goes really well. I hope that this elaboration will prove resourceful when the time comes for you to buy your own home.