Steps to Buying a House

Buying a house is many things. It is an exciting adventure with many discoveries to make along the way. It is an opportunity to reassess your financial situation and build your portfolio for the future. Most of all, though, it is a complex process that can often feel overwhelming. However, there are some basic steps to buying a house that you can expect along the way.

Step 1: Determine Your Budget

Before you start your home search, you must first define the criteria for what you are searching. The most important of these is how much you can afford to spend. Look at your finances, considering your income, expenses, and savings for the down payment and closing costs. This will help you define how much you can spend on a home and set realistic expectations.

Step 2: Get Pre-Approved for a Mortgage

While not required, getting pre-approved for a mortgage is one of the best things you can do as a home buyer. Not only are you getting an accurate assessment of what kind of mortgage lenders are willing to give you, but you are also gaining a powerful tool for negotiating an offer.

To get pre-approved for a mortgage, contact your preferred lender to initiate the process. Unlike a mortgage pre-qualification, a pre-approval is a firm assessment of your credit to determine your debt-to-income ratio. You must provide financial information and documents to the lender and sign paperwork agreeing to the pre-approval. Once it is complete, the lender will give you a written statement of what you can afford and a rate that is typically locked in for 2-3 months.

Step 3: Start House Hunting

In the wake of new technology, searching for a home has never been easier. In fact, you can do it right from your couch! Using a home finder connected to your local MLS®, you can define your search to meet your preferences, including size, location, amenities, and price range. For the most up-to-date information on new listings—which is especially important in a seller’s market where homes are selling quickly—working with a trusted local real estate agent is smartest. Plus, working with a REALTOR® as a buyer is entirely free of charge, so why not use it to your advantage?

Step 4: Visit Houses for Sale

Once you have defined a few homes for sale that you are interested in, it is time to schedule in-person showings. Have your REALTOR® set up property viewings to get a first-hand impression of the houses and assess their suitability. Pay close attention to things like condition, neighbourhood, and any potential renovations or repairs it may need.

Step 5: Writing an Offer

Once you have found a house you want to buy, it is time to make a written offer to the seller. This typically includes a proposed purchase price, desired contingencies (e.g. home inspection, financing, etc.), and additional terms and conditions. Your real estate agent will handle this contract’s fine details for you and present it on your behalf.

Step 6: Negotiating & Signing the Purchase Agreement

After receiving your offer to purchase, sellers can either accept, reject, or counter. This is where negotiations take place until both parties are satisfied. Once you both (hopefully) agree on terms, you will sign a purchase agreement. This legally binding contract outlines the sale details, including timelines for when conditions must be met.

Step 7: Arranging a Home Inspection

A home inspection is one contingency included in most purchase agreements in real estate. It is an invaluable tool in protecting your investment by assessing the property’s condition from the ground up. You can then make an informed decision about whether or not you would like to move forward with buying the home or renegotiating the contract based on what may have been found.

Step 8: Securing Financing

Before possession day, your mortgage lender must finalize your mortgage loan application. To do so, you will need to provide all the necessary documents and information about the property you are purchasing. You will also need to disclose any changes to your financial situation since your pre-approval, as this can affect your final affordability.

Step 9: Closing the Deal

Working alongside your REALTOR®, lender, and real estate lawyer, you will need to take care of any other paperwork and documentation leading up to closing day. This includes obtaining home insurance and having your down payment ready for possession day. You will also want to make any necessary moving arrangements and schedule a final walkthrough.

Step 10: Possession Day

Once all the paperwork is signed, funds are transferred, and closing costs are paid, it is time to take possession of your new home. As you take the keys and step in the front door, take a moment to celebrate. You have made it—congratulations!

Buying a home can look very different between people, depending on your specific circumstances. However, the general framework of the home-buying process almost always looks like this. For personalized guidance and support in your home-buying journey, contact an experienced local real estate agent.