How to Buy a Home

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Looking at homes is the fun part. But before you go house hunting, make sure you have your financial ducks in a row.

Step 1: Know your rights
Buying a home can be a complicated legal process, so begin by familiarizing yourself with your legal rights. The government’s Housing and Urban Development department, also known as HUD, has much of this information available on its website, www.hud.gov.

Step 2: Shop for a mortgage
Shop for a mortgage before you shop for your home. Talk to a variety of lenders to find the best rates and terms. Many will pre-approve you for a certain amount, so you’ll know exactly how much you can offer on a house.

Tip
Many buyers are approved for more financing than they need, so look at homes you can truly afford, not ones you technically can buy based on your pre-approved mortgage.

Step 3: Set a price
Figure out how much you can afford based on your income and monthly expenses. Don’t forget to factor in things like property taxes, homeowners’ insurance, any improvements you might have to make on the home, and utility costs you may not have had before.

Tip
When comparing different lenders, make sure you’re comparing apples to apples. Loans from different lenders can have different terms and conditions that make huge differences in what you will be paying.

Step 4: Get it in writing
When you decide on a loan agreement, get the terms in writing. There’s no law against an unethical mortgage broker pulling a bait and switch on you at the closing.

Step 5: Pick a realtor
Pick a realtor to help you find a home that suits your needs, desires, and budget--and help you with the paperwork involved in buying a home.

Step 6: Visit potential homes
Visit as many homes as you can, making sure to check out everything from the basement to the attic. Test the faucets; open and close doors and windows; look into every nook and cranny. This is not the time to be shy.

Tip
Bring a camera along if you’re viewing a lot of homes so you can keep them straight and review your choices again later.

Step 7: Check out the ‘hood
If you find a home you like, visit it at different times of the day, night, and week to gauge how safe it feels and how noisy it is. Observe the neighbors.

Step 8: Make an offer
Make an offer on the home. A realtor will guide you as to how much you can lowball the owner on the initial offer.

Tip
Make the offer contingent on a home inspection. And, just to be safe, find your own inspector; don’t go with the one the realtor recommends.

Step 9: Shop for homeowners’ insurance
Shop for homeowners’ insurance, which is required by lenders. You often can get a better rate by getting a policy from a company with whom you already do business. In any event, shop around for the best rates.

Step 10: Close the deal
Schedule the 'closing,' the date when the agreements are signed, the money is paid--and you get the keys to your new home!

Did You Know?
The average age of the first time home buyer rose from 27 in 1977 to 34 in 2007.