If you’re considering purchasing a house but don’t know where to begin, this helpful home-buying checklist can guide you. Buying a house is a significant investment and should be approached with caution. Taking each step carefully is essential, as even a small mistake can result in significant financial loss.
Investing information provided in IsaveFuture is solely for educational purposes. Neither IsaveFuture nor its subsidiaries offer advisory or brokerage services, and we do not recommend or advise investors to buy or sell specific stocks, securities, or other investments.
I plan to buy a house soon, so I researched everything I should know and will share it with you. I would love to hear your thoughts, so comment below.
☐ Get out of debt
Pay all your debts before you purchase a house. Buying a home is already a very stressful experience, and it is even more stressful when you know you are adding more debt. Debts can weigh down your budget, leaving little room for other things. Therefore, it is a good idea to be debt-free when buying your house.
☐ Save six months of an emergency fund
Having six months of emergency funds will allow you to be protected in case something terrible happens. We all know that bad things can happen, and they will happen regardless of how careful you are. It can come in the form of leakage in your roof, traffic tickets, loss of job, etc. The point is that you want to be protected should anything unexpected happen. Create a savings goal for your downpayment and use this free template to monitor your progress.
☐ Get a credit report from each credit bureau
Long before you plan to buy a house, you should request a free copy of your credit report, so you can fix anything that might be affecting your score. Remember, the higher your credit report is, the lower your interest rate. This is important because the difference between a low-interest rate and a high-interest rate on a mortgage is thousands of dollars.
☐ Discover your affordable house price range
Calculate your mortgage cost. Include the principal, property taxes, interest, and homeowner insurance costs. Some people, depending on their unique situation, will add more costs. Such as private mortgage insurance (PMI) and homeowners association insurance fees (HOA). Once you have the mortgage total, calculate how much the 25% of your after-taxes income is, and make sure your mortgage does not exceed that amount.
☐ Save for the down payment, closing cost, and moving expenses.
If you Pay the 20% down payment, you won’t have to pay thousands of dollars for private mortgage insurance (PMI). This insurance can cost you from 0.55% to 2.25% of the original loan. Also, save for the closing cost and moving expenses.
☐ Get pre-approved
Preapproved will give you an advantage over other buyers and reassure the seller that you are ready to make the deal. Finding the ideal house for you can sometimes be difficult, so you want to ensure that no one will take it away from you when you find the house of your dreams.
☐ Choose your desired residential location.
Allocate the neighborhood you want to live in. You might want to research the school system if you have kids or plan to have kids. Also, A good location will give your house even more value. This is important because you may want to resale the house. Therefore, shop with resale value in mind and make sure there is potential for value growth.
☐ Hire an experienced realtor and discuss your must-haves
Interview a few real estate agents until you find one that you trust. Someone who understands and guides you through the process. Ensure you hire someone with experience and a long record of closed sales.
☐ Search for your house
You can search for homes by going to an open house, on the internet, or through a real estate agent. Keep in mind that some information on the internet can be false. However, there is a multiple listing service (MLS) that can be of great use to you. MLS is a private database of available homes for sale compiled and managed by real estate professionals.
☐ Make an offer on your favorite house
Once you find your home, make a competitive offer. This will include filling out a purchase and sales agreement. This legal document includes the terms and conditions of the deal, like purchase price, closing date, and other contingencies.
☐ Pay the security deposit to start the mortgage process
Once your offer is accepted, you must pay the security deposit, known as earnest money. Earnest money is money you put down to assure you’re serious about buying a house. This down payment is usually about 1-5% of the purchase price.
☐ Get a home inspection and appraisal
A home appraisal is the opinion of a licensed or certified person of a home’s value. If you are getting a loan, the appraisal is required by your lender. The appraisal involves researching recent sales of comparable homes and analyzing the property. This protects you from overpaying for your house. For instance, you can change your offer if the appraisal returns lower than the offer price.
Also, get a home inspection. This can prevent you from future negative surprises and save you money at the time of the purchase. For instance, if the inspector finds structural issues, you can ask the seller to change the price, fix the issue, or cancel the contract.
☐ Buy title insurance
Title insurance is essential because it protects you from potential financial loss related to the ownership of your house. Suppose any title defect is discovered after you have closed on the house. In that case, it can potentially result in various legal costs or, worse, the loss of your property and the money you invested. I’m sure you don’t want this headache!! Remember, this is an upfront one-time payment, so you don’t have to worry about paying a monthly premium that will be added to your mortgage payment.
☐ Close on your house and enjoy it
You have officially become a new homeowner! You have to sign a few more forms and pay some closing costs, and you are done!!
There you have it! These are the most critical steps that I found. When making a significant financial decision, seeking counseling is crucial. That’s why I scoured the internet to find valuable information, and now I’m sharing it with you in the hopes that it will be of assistance.
Where there is strife, there is pride, but wisdom is found in those who take advice.
Proverbs 13:10
