Couple bringing moving boxes into new home.

Home Buying Process Overview

Sarah Li Cain4-minute read
November 29, 2021

There are a lot of steps to buying a house – almost to the point where it can get a bit overwhelming. There can be a lot of moving parts: figuring out your financial situation, completing the paperwork, knowing what you want, and finding a real estate agent who’s a good fit. We’ve written this guide to give you an overview, including what you need to buy a house and how the steps work, to make it all feel more manageable.

Step 1 – Think About What You Want

When you’re figuring out how to go about buying a house, one of the most crucial steps is to figure out what kind of home you want and in what neighborhood. Whether you have your mind set on certain preferences or haven’t really thought about it, look at places that have real estate listings, as doing so can help you figure out different styles of homes you like.

Also do some research on neighborhoods and amenities in areas you may be interested in to see where you might like to live. You’ll also want to consider your lifestyle – like if you’re planning on starting a family, you may want a home with a few more bedrooms than what you currently have.

Step 2 – Look At Your Financials

You’ll want to make sure your finances are in order before talking to a lender so that you can find out if you can even qualify for a mortgage and at what rate. Understanding your overall financial picture (plus the paperwork needed to prove it) can help make the home closing process go more smoothly.

First things first: check your credit report and your credit score. That way you can see what types of financial activities lenders will look into when they assess your creditworthiness. You can monitor your credit score using free tools like RocketHQSM.

Don’t forget to get a free credit report from all three major credit bureaus every 12 months — Equifax®, Experian and TransUnion®. In general, the higher your credit score, the more likely you’ll qualify for the best mortgage rates and terms. Most mortgage lenders want a very good credit score, though exact requirements will differ from lender to lender.

If you find that your credit score isn’t good, then it’s time to look at your credit report to see what might be affecting it and take the necessary steps to course correct.

Step 3 – Determine How Much You Can Afford

Just because a lender may qualify you for a bigger mortgage doesn’t mean you need to take them up on their offer. It’s better to assess your financial situation to see how much you can put toward your monthly payments. Don’t forget, you’ll also need to figure out fees like closing costs, insurance and regular home maintenance tasks on top of your mortgage payments. There are lots of home buying resources to help you figure out what you can afford.

Step 4 – Shop Around For A Lender

Getting preapproved by a lender before you look for a home will help make sure that you look like you’re serious about buying a home. It’ll also show what you may qualify, which will help determine your budget.

The preapproval process includes the lender taking a look at your credit score and financial situation and offering a document that states how much the company is willing to lend you. Getting preapproved with multiple lenders may show the seller that you’ll be able to better finance the home.

Getting preapproved doesn’t mean you need to commit to any loan. That can wait until you move forward with the application process.

Step 5 – Work With A Real Estate Agent

A real estate agent will help you look at properties, plus be your advocate when it comes to negotiating and closing. You can ask for recommendations or see if this person has gotten any reviews online. Make sure to meet with them and ask questions to see if it’s a good fit.

Step 6 – Look At Homes

Your real estate agent will recommend homes, but you can also compile a list of places you’re interested in viewing. Set up an appointment with your agent to look at some houses. Warning though: You could see a lot of houses, so make a list of each home you visit and write down any distinctive features, plus what you liked and didn’t like about the property. Don’t forget make notes about the surrounding area, too.

Step 7 – Make An Offer

After you find a home you want to buy, your agent will work with you to put together an offer. This means helping you look at the current market and guiding you to submit an offer that will look the most attractive. It could also include any contingencies like making sure you get a home inspection and how much you want to put down as earnest money (to show how serious you are about the purchase).

You may need to go back and forth negotiating, but once the seller agrees, congratulations!

If the seller does not agree, you’ll need to look at other homes again.

Step 8 – Attend The Home Inspection

You’ll need to complete a home inspection within the timeline stated in your purchase agreement. This is when a home inspector will look at the structure to check for potential issues. If the inspector finds any, you can negotiate with the seller to have it fixed or get a seller credit so you can do repairs once the home is yours.

This is also the time when you can walk away if the damage is extensive, and you should get your earnest money back.

Step 9 – Work With Your Lender

Throughout the closing process, your lender will ask for supporting documentation to finalize the application process. Documents could include bank account information and permission for them to check your credit report.

You’ll also need to talk to an insurance agent about getting a home insurance policy (or to update the one you currently have). Don’t forget to contact the utility companies to make sure your water and electricity are turned on by the time you move in.

Step 10 – Close On The Home

The big day is here. You will have been asked for a certain dollar amount to put into escrow, which includes your down payment and any relevant closing fees. Your agent may have negotiated a final walkthrough of the property before signing papers to officially close on the home. You’ll need to read over documents such as your mortgage agreement, and the agreement that you’ll take on the deed.

This is when you’ll get the keys. Let it sink in – you’re now a homeowner.

Get Started

Ready to go through the process yourself now? Once you've thought about what you want and what you're comfortable paying, a great first concrete step is to get preapproved!

Apply For A Mortgage Online

Sarah Li Cain

Sarah Li Cain is a freelance personal finance, credit and real estate writer who works with Fintech startups and Fortune 500 financial services companies to educate consumers through her writing. She’s also a candidate for the Accredited Financial Counselor designation and the host of Beyond The Dollar, where she and her guests have deep and honest conversations on how money affects our well-being.