How to Buy a House: The Process and What to Expect
Each home sale is unique, and
some take longer than others. While we can’t cover every scenario, here’s an
overview of a basic home
Before you fall in love with a
house, first find out how
much home you can afford — which is usually three to five times your
annual household income — and get prequalified for a mortgage. Doing so just
requires you to submit some basic financial information (like your income and
any savings or investments) so you know the price ranges of homes to consider.
Next, you’ll need to get preapproved for credit,
which is a more involved process requiring you to break out your W-2s, bank
statements, pay stubs and anything else that can prove your financial standing
and ability to repay a loan.
Unless you fall in love with the
first home you see, you’ll spend around 30 to 60 days browsing online listings
and classified ads,
in addition to viewing homes with a real estate agent.
This is a good time to note any
price changes on homes that interest you, and watch how long they stay on the
market. This will help you set reasonable expectations.
If you’re shopping in a
competitive market, finding an ideal home can be challenging. A hot market is full
of buyers like you who may beat you to submitting an offer.
But if you’re looking in an area
with few homes, it may take even longer to find your dream home.
Making an Offer
Once you find your dream home, you should look at the home closely and check for any major issues, such as structural damage or anything that could seriously put the home and your family at risk.
Listen and Learn: 14 Things that First-Time Homebuyers Must Inspect
If the home is in good shape, make
an offer and wait for the seller’s response. Most purchase contracts have a
deadline, such as 72 hours, for the seller to accept or reject the offer. If the
seller makes a counteroffer, that extends the purchase’s timeline.
And, keep in mind, you may have to
go through multiple counteroffers, not to mention competing offers!
That’s right — if it looks like
your dream home, it probably looks like someone else’s dream home too. If a
seller receives multiple offers, you’ll need to counteroffer with a better deal.
This could mean increasing the
earnest money (which gives the seller peace of mind because it’s what you
forfeit if the deal doesn’t go through), paying the difference between the
property’s appraised value and your offer in cash, agreeing to do some of the
repairs, and of course, offering the highest amount you can afford for the
Some buyers even write personal
letters to appeal to the seller’s emotions! It’s not a surefire dealmaker, but in
some cases, it couldn’t hurt!