7 things to do when you find a house you want to buy

You’ve found a home you want to buy -- now what?

The price matches your budget, and the house is structurally sound and close to town. But you worry about the home purchasing process. You’re not alone. Nearly 45% of Americans felt nervous throughout the entire home buying process, and another 40% said buying a home was one of the most stressful events in life, according to Homes.com.

What is the first thing to do when you want to buy a house?

Whether you're a first-time homebuyer or a seasoned pro, it's always wise to brush up on the steps to buying a new house. Plus, you want to make sure you're picking a house you can afford. So, you'll need a reasonable mortgage payment.

7 things you should do after finding your dream home

Although there are hoops to jump through, there are steps to follow to bring you closer to closing within your price range.

1. Check your credit score
2. Obtain pre-approval letters
3. Make a solid offer
4. Secure your financing
5. Get a home inspection
6. Go for a final walkthrough
7. Close on your home

1. Check your credit score

Generally, your lender will determine the credit score needed to qualify for a home loan. The required minimum score, however, also depends on the type of mortgage you're seeking. More so than conventional loans, federal loans like VA and FHA have strict guidelines for eligibility.

You’ll also likely need good credit to qualify for a home loan. Your lender will look at your bill-paying history and your debt-to-credit ratio (DTI), which should be no more than 43%. Your lender may also look at your gross monthly income to ensure you can pay all housing expenses, including insurance, taxes, etc.

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2. Obtain pre-approval letters

To be entirely confident you will qualify for the home of your dreams, obtain pre-approval letters and have them on-hand when you submit an offer. Preapproval letters give you an edge over other buyers in a competitive market and add strength to your offer.

When figuring your budget, don’t forget to include expenses like homeowners and other insurance costs, earnest money, origination fees, closing costs, home inspection costs, appraisal and attorney fees, costs of appraisal and title, and more.

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3. Make a solid offer

Even in the middle of the COVID pandemic, the real estate market maintained its resilience, as evidenced by strong home-buying activity. But housing inventories are low, and it’s not uncommon for a bidding war to break out for a home. Your real estate agent will help you make the best offer, along with any conditions, by figuring in your finances and overall budget.

The seller may accept your offer or counter. You can accept the counteroffer or submit a higher offer until you reach a deal or decide to walk away. If you and the seller agree, you will likely submit a deposit. This is when the transition goes to escrow, which can take up to 30 days.

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4. Secure your financing

Even if you’ve been pre-approved, you’ll still have to officially apply for a loan. Your lender will work with your real estate agent to set up an appraisal. If the appraisal matches your offer, you’re good to go.

However, if the appraisal comes in low, your lender may not approve the full amount of your loan. If the appraisal comes in higher than your offer, you are purchasing the home for less than market value, giving you immediate equity in your new home. Not sure how much you’ll qualify for? Use an ​online mortgage calculator​ to determine potential monthly payments.

5. Get a home inspection

Your new home may look stunning on the outside, but it’s what may be hidden that can cause problems down the line. That’s why getting a home inspection is an essential part of your home buying process. Because the buyer pays for the inspection, some buyers waive the right to an inspection. But that’s not the best idea.

Problems often found during an inspection that can cost thousands of dollars in repairs include evidence of standing water, significant cracks in the foundation, insufficient insulation, a roof in need of repairs, etc.

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6. Go for a final walkthrough

7. Close on your loan

Signing the paperwork to close on your loan should take only a few hours. You’ll need identification and a check or cashier's check if closing costs aren’t rolled into the loan. Be sure to ask questions during this time to fully understand what you’re signing. Documents can include the promissory note, closing disclosure statements, deed of trust, and occupancy certificate.

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How long does it take to close on my dream home?

In a 2018 report by Ellie Mae, the average closing process takes about 40 days. That may seem like a long time, but when you consider that about 32% of all transactions run into some type of delay, it’s understandable.

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