How to Buy a Home

Buying a home can be a chore, but it doesn’t have to be unpleasant. Start with a step-by-step list and then, working with a good agent, you can cover all your bases. Still sound intimidating? Try using this checklist as a template for finding your perfect home.

Step #1: Choose Your Loan

There are a few people in the world that can plop a sack of cash on the table and say: “I’d like this house, please.” For the rest of us, it helps to understand our financing options when we’re looking to buy a house. Planning ahead and knowing what kind of loan fits your circumstances can assure a quick and relatively painless application process. There are a couple different loan options depending on your individual wants and needs.

• Fixed-rate mortgage – If you are planning on living in the house for an extended period of time, this is a good choice. You have the stability of knowing exactly how much you will pay for the life of the loan, the mortgage rate never fluctuates, and monthly payments are generally lower.

• Adjustable-rate mortgage – This type of loan is for people who plan on quickly reselling their home, or suspect that mortgage rates are going to drop. The amount you pay is based on a fluctuating index plus an extra fixed amount, called the margin.

Step #2: Prequalify for the Loan of Your Choice

Is it really necessary to prequalify for a mortgage? No, but it helps a lot. When you prequalify, you know your limits. You know what price range you can go after, effectively narrowing the list of possible targets, and eliminating all the time that others waste looking at the wrong homes. Prequalification takes very little time but has long term benefits. It shows potential sellers that you are a serious buyer and not “just browsing.” And in the end, completing the final mortgage application is a simple step, since you’ve already provided a lot of the necessary information.

Step #3: Find a Home. The Hunt is on!

Once you know what type of home you can afford, then it’s down to location, location, location. It’s up to you to ask questions. You have to scrutinize the property. You have to know what you are getting involved in because we’re talking about your home… not an impulse item near the register.

Make a list of your exact needs and your wants stick to it (within reason of course). Consider your location:

• How are the schools in the neighborhood that you are considering?


• Do I want to live in a rural, urban, or suburban area?


• How far will you have to drive to go to a movie, attend cultural events, eat out?


• What is the crime rate in the neighborhoods that you are considering?


• Are there businesses nearby which might cause unwanted distractions?

Also know the kind of house you want:

• Number of bedrooms


• Square footage


• Hardwood/carpeted floors


• A/C, Heat


• Laundry room

These are just the basics for a solid list. A good agent can help guide you through this process and find the home that is perfect for you.

Step #4: Make an Offer on the Home of Your Choice

Deciding what to offer a seller requires a little psychological analysis. There are a few points to consider which will help you determine the lowest possible price with the highest probability for acceptance.

1) Find out what other homes in the area have sold for. If the asking price is significantly higher, he or she is likely asking too much.

2) Find out how long the seller has been trying to sell the home. Chances are if the home has been on the market for a while, the sell will be open to negotiation.

3) Ask your Realtor to find out how many other offers have been made. If there have been, you could end up paying a higher price.

4) Look at the neighborhood. Location is one of the biggest variables in working out a good offer.

5) Ask your Realtor to analyze the real estate market. If interest rates are low then more buyers are in the market, adding competition and raising prices.

6) Find out why the seller wants to sell his or her home. If they need to move quickly, they might consider taking less money.

Step #5: Apply for a Loan

Now you need to formally apply for the mortgage, which is easy if you’ve been prequalified. When applying for the loan you will need to provide income information (past and current), your assets, expenses, employment history, and other information that your lender might request.

Having all this information ready can assure a speedy process and get you moved into your new home that much faster.