For most of us, buying a house is the largest purchase we’ll ever make – and it can also feel like the most intimidating. Buying a house is unfamiliar, and the home-buying process has its own vocabulary.
It’s a lot, but it doesn’t have to be so scary! Sure, there might be stressful moments. But we’ve outlined some of the biggest steps so you’ll feel confident as you move toward buying a house for the first time.
1. Get your financial documents organized + get preapproved for a loan
The steps to buying a house begin with getting your financial documents in order.
You’ll need to pull out W2s, paystubs, bank statements and other relevant paperwork more than once, so start a file and keep it handy.
Meet with potential lenders to get preapproved for a loan, and keep in mind that not all lenders are alike. A credit union may have more conservative policies than a bank, for example, setting a higher bar for preapproval.
Consider meeting with a mortgage broker who can get a handle on your full financial picture and connect you with the right lender. If you choose to find a real estate agent first, they will also have recommendations for lenders.
2. Figure out your budget and down payment
Learn what you can and want to spend on a house. Your lender may approve you for a higher amount than you’re comfortable spending, so consider financial priorities your lender may not know about. Homesnap’s Mortgage Calculator can help you figure out what your mortgage payment would look like at various price points. Just click into any listing on the Homesnap app or website, and click on the “estimated mortgage” above the listing price to see the calculator.
FYI – you do not have to put down 20%!
A 20% down payment typically lets you avoid taking out private mortgage insurance, but it’s not a requirement.
Your lender or mortgage broker can help you weigh pros and cons of putting down more or less money.
3. Find a real estate agent
Though it’s easier than ever to shop for a home online, it’s a huge help to have someone on your side who knows the ropes. And if you’re worried about the expense of a real estate agent, remember that buyers typically don’t actually pay their agent (their fees usually come from the seller).
Look on sites like Homesnap for an agent, and interview a few to find one you feel comfortable with. Pick an agent who specializes in your search area. They’ll help you schedule private viewings so you don’t have to fight open-house crowds. And, they’ll let you on the secrets to winning an offer in the neighborhoods you love.
Real estate agents can also answer all your questions about the home-buying process and help you anticipate the steps along the way.
4. Narrow down your dream neighborhoods and home styles
You can create saved searches in real estate apps like Homesnap, and share them with your agent to make sure you’re on the same page. You may adjust your search areas or change your search criteria once you’ve gotten started. That’s totally fine, and it’s totally normal!
5. Learn about the timeline for the home-buying process in your city
Depending on which market you’re shopping, the process may move quickly once you find a house you love. If you’ll need to make an offer less than a day after viewing a property, you’ll want to know ahead of time.
Talk with your agent to find out how much time you’ll have to make an offer.
Discuss how much competition you should expect and any trends that make offers more competitive (such as shorter closing periods). Find out how much time you should expect between the moment your offer is accepted and the day you get the keys. Check out our recent article about the trends we’ve seen in some of the country’s biggest markets.
6. Learn some of the basic terminology
You’re walking into a whole new world with its own lingo. Don’t be afraid: You’ll pick it up fast! A few terms to help get you started:
- The “bid” or “offer” is your formal request to purchase a home. It is drawn up by your agent and includes all kinds of details about pricing and contingencies.
- A contingency is any condition that must be met after an offer is accepted but before the sale closes. For example, an “inspection contingency” means a buyer can formally inspect the home within a certain amount of time after the offer is accepted. If the home inspection turns up problems, the buyers and sellers can negotiate how it affects the bid. Or, the buyer could remove their offer entirely. In the most competitive markets, fewer contingencies make an offer more appealing to a seller.
- When a home is listed as “under contract,” it means an offer has been accepted but the sale has not yet closed.
We’re barely scratching the surface with these key terms, but don’t be intimidated. You’ve got this! After a few conversations with your agent, you’ll feel totally confident and eager to find that dream home.