If you ever sit down and think about the steps to take to buy a house, you may find you’re not as ready to buy as you think. Then again, you may be in a perfect position and not even know it. The home buying process can be intimidating. It doesn’t help that a lot of information circulating isn’t accurate.
The home buying process is different for each person and can take many forms depending on your situation. As true as that may be, there are a few consistent steps to take to buy a house. Preparing for what you know will happen makes the process easier and puts you in a position to get into your future home quickly.
Ignore these steps, and the home buying process is sure to become a long, drawn-out headache.
Understanding the 3 essential steps to take to buy a house
Many of the biggest headaches in buying a house are entirely avoidable with a little preparation.
Of course, this is a two-sided deal, and the seller can cause problems for you too. Still, taking care of your end of the process will make things run as smoothly as possible.
1. Prepare all the documents you will need
Organization is one of the most important steps to take to buy a house. If you don’t know where to find the information you need, you can cause problems in your buying process down the road.
Before you get your mortgage application process started, collect and organize the following documents so you have them ready when you need them:
- Two years of W-2 forms
- 30 days worth of pay stubs
- Three years of income tax returns
- List of assets and liabilities
- Three months of account statements from any bank and investment accounts
- Proof of settlement for any former credit or financial issues
2. Decide how much house you can buy
One of the biggest mistakes prospective home-buyers make is not setting their limit. When you don’t have your numbers in mind, you wander aimlessly on real estate websites, looking at all the homes available. This is a big waste of time.
Think about your income, the money you have saved, and what your income will look like in the future. Only take what is certain into consideration. Too many people err when considering a potential raise as a guarantee. When that raise doesn’t come through, and you’ve already purchased a home, you now have payments larger than you can manage.
Decide on a price range that feels reasonable for you now. Also, decide on your non-negotiables. What are the things that you need to have in your home? Don’t judge yourself on these either. This will be your home in the future, and it needs to be right for you and your family.
Does it need to be near a school? Does it need to have an area for exercise equipment? Do you want it within 5 miles of your work?
Answering these questions and finding your price range helps you eliminate many houses from your buying decision. Now, you can stop your aimless browsing and know that you are taking this seriously.
3. Know which kind of mortgage you will apply for
Unless you are buying with cash or are an investor purchasing with hard money, you will need a mortgage. There are plenty to choose from, and knowing which is right for you is one of the essential steps to take to buy a house.
Do you not have much money for a down payment? An FHA or USDA loan might be best for you.
Are you planning to buy a high-value property? Standard mortgages have lending limits, and you might need to look into using a Jumbo Mortgage.
Mortgages are made for specific scenarios, and if you don’t know which one you’re using, it’s proof you don’t understand where you are going. When you know which type of mortgage you’ll apply for, it will answer a lot of questions for you. Additionally, some mortgages limit the locations you can buy properties, and that will also inform your decision.
Buying a home is an exciting moment, but it can be overwhelming. Get these essentials in order and you’re off to a winning start.
How close are you to buying your new home? What is holding you back from making a move?