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Home Buying Process: Steps, Costs, and Legalities

Buying a home is an exciting milestone in many people’s lives. However, the process can also be complicated and stressful if you don’t know what to expect. This guide will walk you through the 10 main steps of the home buying process so you can feel prepared and confident along the way. 

The typical home buying process takes about 10 weeks from start to finish, according to the National Association of Realtors. It involves many steps including getting pre-approved for a mortgage, finding the right home, making an offer, inspections, financing, and closing. 

While every home purchase is unique, understanding the general stages of the process can help buyers know what to anticipate. It also allows buyers to prepare and budget accordingly as well as avoid common mistakes. According to a 2023 survey by Rocket Mortgage, 51% of all buyers found their homes through the internet, while 28% used a real estate agent.

Following the key steps and seeking guidance from professionals like real estate agents and lenders makes for a straightforward process. With proper planning and reasonable expectations, buying a home can be achievable, affordable, and even fun.

1. Determine Your Budget

The first step is to understand your finances and determine your home buying budget. Important factors include:

  • Income – Your gross monthly income and income sources. Make sure to document and verify this with paystubs, tax returns, and bank statements.
  • Existing debt – Student loans, credit card balances, auto, and personal loans should be accounted for.
  • Downpayment savings – Most lenders require at least 3-20% downpayment. The typical downpayment for first-time buyers was 6%, while the typical downpayment for repeat buyers was 17% according to the National Association of Realtors 2022 Profile of Home Buyers and Sellers. For 47% of buyers, the source of the downpayment came from their savings.
  • Closing costs – These include lender fees, attorney fees, filing fees and prepaid costs like home insurance and are typically 2-5% the total loan amount.

Also factor in monthly costs including mortgage payments, property taxes, utilities, and maintenance costs. Online mortgage calculators can help estimate monthly payments and loan amounts you may qualify for.

2. Get Preapproved for a Mortgage

Once you know your budget, the next step is to get pre-approved for a mortgage. This involves providing documents that verify your identity, income, assets, and liabilities. 

Being preapproved shows home sellers that you are a serious buyer who has been vetted by a lender for a specific loan amount. According to National Association of Realtors, 78% of recent buyers financed their home purchase.

Preapproval typically locks in an interest rate and loan type for 60-90 days. This gives you time to make an offer when you find the right home.

3. Find a Real Estate Agent

A real estate agent represents and guides you through the entire buying process. They help identify homes, schedule showings, negotiate the purchase, and manage paperwork. The most common way buyers found real estate agents was through friends or relatives.

Look for an agent who is knowledgeable about your local market, has a great track record, and makes you feel comfortable. Many first-time buyers opt to partner with an agent. Their expertise helps avoid costly mistakes and makes the buying journey smoother.

According to National Association of Realtors, 86% of all buyers purchased their homes through a real estate agent.

4. Start House Hunting

Now the fun part begins – finding that dream home! Your real estate agent will look at your budget and wishlist and set up showings for homes that match. 

According to a 2023 Rocket Mortgage survey, finding the right property was the most difficult step in the home buying process for 56% of all buyers.

It helps to be flexible on your criteria as no house will perfectly match. Focus on “must-haves” versus “nice-to-haves.” 

Utilize mobile and desktop search tools. According to Rocket Mortgage, buyers under the age of 56 generally preferred mobile devices in their home search, while buyers 57 and older preferred desktops or laptops.

Also plan to view multiple homes. Seeing options in person helps refine preferences. Take photos to compare later.

5. Make an Offer on a House

Once you find a home you want to buy, your agent will draw up a written offer detailing the purchase price and terms. This begins contract negotiations with the seller.

Offer strategies your agent may suggest include:

  • Offer at or slightly below list price if it is already fair market value
  • Offer convenient closing dates to incentivize the seller 
  • Submit an escalation clause which increases your offer if other bids come in 
  • Make a higher downpayment to signal you are well-qualified
  • Waive contingencies like the appraisal to make your offer more attractive

Earnest money of 1-3% shows you are serious. This eventually goes toward the downpayment.

Be prepared for counteroffers as most sellers expect negotiation. Know your budget and walkaway point.

6. Get a Home Inspection

Once an offer is accepted, you enter the due diligence period. This allows you to complete inspections and carefully assess the property’s condition. 

A general home inspector checks on the home’s roof, foundation, electrical, plumbing, HVAC, appliances etc. You may also choose specialized inspectors for mold, lead paint, or pools. 

Ask your real estate agent for inspector referrals, and make sure to be present for the inspection. This helps you understand any serious issues versus minor repairs.

On average, buyers spend $500-$1000 for home inspections which can uncover expensive problems like structural damage. Better to know upfront!

7. Negotiate the Price Based on the Inspection Results

Your agent will review the inspection report and help negotiate requests and credits for any necessary repairs. This may involve:

  • Asking the sellers to fix key issues
  • Getting cost estimates for fixes to adjust the price
  • Withdrawing contract contingencies like appraisal clauses 
  • Walking away if repairs are too costly

Being flexible and reasonable can help both parties feel satisfied with the outcome. Make sure any agreements are formally captured in the purchase contract before moving forward.

8. Secure Your Financing

Your preapproval holds rates for a limited time, usually 60 days. Now it’s time to formally secure your mortgage loan. Provide updated paperwork to refresh income verification and credit checks. 

The lender will order an appraisal to ensure the home value matches the loan amount. You will also complete a final loan application and provide funds for closing. 

Shopping lenders at this stage may cause you to lose a rate lock. Stick with your preapproval lender for a smooth process.

9. Close on Your New Home

During closing, you legally obtain ownership of the property after all financial matters are finalized. 

Some key steps include:

  • Final walkthroughs to ensure condition is as agreed 
  • Signing key documents like mortgage note, deed of trust
  • Paying closing costs and downpayment
  • Transfer of home insurance coverage
  • Getting keys and garage remotes!

Closing may take several hours and is usually handled by attorneys representing you and seller. 

Pro Tip: Remember to bring proper ID and a cashier’s check, certified check or wire transfer to close.

10. Move In!

Once closed, the home is yours! Time to celebrate and move in.

Some post-move in tips:

  • Change locks if you don’t get new keys
  • Forward mail with local post office
  • Update your address on accounts, licenses, etc 
  • Meet neighbors and learn about the community
  • Set up utilities like power, water, internet
  • Enjoy home ownership – welcome home!

Following each step carefully and partnering with the right professionals makes home buying an exciting adventure, not a chore. In no time, you’ll be settled into your new abode!

Ready to embark on your home buying journey with confidence? Don’t miss a step – download our comprehensive Home Buying Checklist now and take the first step towards securing your dream home!

What is the Home Buying Process?

The home buying process refers to all the necessary steps buyers take to purchase residential real estate. It’s a complex journey that involves everything from budgeting, finding the right home, securing financing, to transferring ownership. 

Buyers should expect the process to take an average of 10 weeks. However, it can move faster or slower depending on factors like market conditions, financing, negotiations, and closing preparations.

Why is Understanding the Home Buying Process Important?

Being informed on what to expect removes uncertainty and stress during an already emotional purchase. It prevents hassles and delays so buyers can take proactive steps.

Since most buyers take out mortgages, the process also involves approval requirements. Prepared buyers can get approved faster with accurate documentation and prompt responses.

The process has strict timelines and legal obligations as well. Missing a deadline could ruin the deal. Knowing the milestones helps buyers stay on track.

How Long Does the Home Buying Process Take?

The typical home buying process takes about 2-3 months from when you view the first home to closing day. However, it can vary based on market conditions.

According to the National Association of Realtors 2022 Profile of Home Buyers and Sellers, home buyers spent 10 weeks on average searching for and purchasing a home.

In competitive markets, buyers may hasten the process, acting quickly to submit offers lest they lose out on desirable homes.

On the other hand, delays in securing financing, home inspections, or closing preparations can elongate the process. There may also be delays between the accepted offer and closing date depending on contract terms agreed upon.

Here are those sections rewritten in paragraph form with the added statistics:

What are Some Common Mistakes to Avoid in the Home Buying Process?

Navigating the home buying process can be challenging, and it’s essential to steer clear of common mistakes. Notably, 56% of homebuyers find that finding the right property is the most challenging step in the process (National Association of Realtors, 2022).

Before you start your search, getting fully pre-approved for a mortgage is crucial as it enhances your negotiation power, especially in competitive markets.

Another misstep to avoid is making an offer on a home without the expert guidance of a real estate agent; 86% of recent homebuyers relied on real estate agents or brokers during their purchase (National Association of Realtors, 2022).

These agents craft strategic offers tailored to your unique situation. Don’t take too long to submit an initial offer or counteroffer, as the median number of days a home spent on the market in December 2022 was 67 (

Forgoing thorough home inspections or other due diligence is ill-advised, as this prevents you from discovering costly defects before purchase. Lastly, make sure to budget properly for closing costs and prepaid items like insurance and taxes.

What are Some Tips for First-Time Home Buyers?

First-time homebuyers, who had a median age of 36 in 2022 (National Association of Realtors, 2022), should start their journey by educating themselves about the process, timeline, and expectations. It’s noteworthy that 26% of home purchases in 2022 were made by first-time buyers (National Association of Realtors, 2022).

Begin financial planning early, improving credit scores and saving for the downpayment. Thoroughly documenting income and assets is key for a smooth mortgage pre-approval, and having experienced, responsive real estate agents and lenders who are familiar with guiding new buyers is wise.

It’s important to view multiple home options rather than rushing into a decision. Making offers contingent on in-depth home inspections, as suggested by home inspection statistics, provides protection.

Researching closing costs beforehand enables accurate budgeting, and asking for help when needed ensures professionals can guide first-timers through each milestone.

Can You Buy a House Without a Real Estate Agent?

While technically possible, buying a house without a real estate agent is not recommended.

A significant 88% of homebuyers believe that buying a home is still a good financial investment (National Association of Realtors, 2022). The majority of buyers (86%) purchase their homes through real estate agents or brokers (National Association of Realtors, 2022) because agents offer a range of valuable services. They match buyers to suitable properties, handle scheduling showings, negotiate effectively, assist with complex paperwork, and provide access to MLS listings.

Importantly, their commission comes from the seller, so there’s no extra cost for the buyer. With these benefits for such an important transaction, a licensed real estate agent is a worthy investment.

What are Some Factors to Consider When Choosing a Mortgage Lender?

Selecting the right mortgage lender is crucial in the home buying process. When evaluating lenders, it’s important to consider the types of mortgage products offered, whether conventional, FHA, VA, USDA, or refinance options.

Be aware that 78% of recent homebuyers financed their home purchase (National Association of Realtors, 2022). Compare interest rates and rate lock terms to identify the best deals. Consider origination, underwriting, and application fees, which can vary.

Excellent customer service and fast response times are vital, especially when under contract. The processing and closing timelines also affect how quickly you can seal the deal. Length of rate-lock preapprovals, typically 60-90 days, can make a difference.

First-time buyers should work with lenders experienced in their unique needs. Vetting lenders thoroughly ensures financing that progresses seamlessly.

What is the Role of a Home Inspector in the Buying Process?

Home inspectors play a critical role for buyers in the period between having an accepted offer and closing. Their job is to thoroughly evaluate the current condition of the entire property. This includes assessing structural soundness, like the foundation, framing, and roof.

They also examine the building envelope, including siding, windows, and doors. Major systems like plumbing, electrical, HVAC are tested for functionality and defects. Attached garages, decks, porches, and other structures are inspected. Energy efficiency factors like insulation and ventilation are reviewed. Installed appliances set to convey are operated to determine working order.

Home inspection statistics suggest that only 10% of homebuyers were dissatisfied with the home-buying process (National Association of Realtors, 2022), in part because smart buyers negotiate credits or fixes based on inspection results before finalizing the transaction.

How Can You Prepare for Closing Day?

Being prepared for the closing day of a home purchase is key to a smooth process. According to a 2022 survey by, 22% of buyers said last-minute glitches arise in the week leading up to closing, so advance preparation is vital.

To optimize readiness, maintain regular contact with your lender, real estate agent, and attorney, promptly returning all paperwork needing signatures. Complete final walkthroughs of the property a few days prior to verify condition. Have financing arranged for the downpayment and closing costs. Review the preliminary closing disclosure to confirm final figures.

Schedule moving truck rentals, time off work and childcare in advance. Make preparations to transition your previous residence, whether selling or handing off to new tenants. Set up utilities like power and water to transfer at closing. Review copies of provided closing documents to be informed. Doublecheck closing location and timing.

Being organized, responsive and hands-on from the start prevents last minute surprises and costly delays. The week before, confirm all needed funds are transferred, final walkthroughs are scheduled, and items are packed and ready to move. Taking proactive steps leads to a smooth closing and on-time celebration of the new keys in your hand!

What Should You Do After Moving Into Your New Home?

The work doesn’t stop once you’ve moved into your new home. According to HomeAdvisor, 40% of new homeowners report making updates, renovations or repairs within the first year of moving in. Being proactive upfront saves money and prevents problems down the road.

One of the first things to do is change the locks if you weren’t provided new keys. This ensures previous owners or realtors no longer have access. Take time to introduce yourself to neighbors – you’ll be living close together so positive relationships are key.

Don’t forget to submit mail forwarding paperwork to the post office so important letters and packages arrive at your new address. Also update your address with financial institutions, government offices, employers and schools. Reviewing homeowners insurance with an agent guarantees proper coverage for possessions and liability needs.

Childproofing with cabinet locks, outlet covers and other safety devices is essential if kids are in the home. Schedule HVAC system tune-ups to maximize efficiency and lifespan. Locate and test water, gas and fuse shutoffs so you can quickly respond in emergencies. Replace air filters and test smoke detectors to maintain healthy indoor air and fire preparedness.

Finally, have fun decorating, customizing and making memories in your new nest! The new home honeymoon period goes by quick.

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