Basic Guide to Buying a House...Part 5

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How to find and buy a home

1.       Read the rest of this guide, especially the parts about estimating how much home you can afford. The rest of this guide covers everything below.

2.       Get a copy of your credit report and clean up your credit record as much as possible.

3.       Go to your bank, ask to talk to a loan officer, tell them you want to buy a house, fill out an application, and get what's called a Pre-Qual Letter.  You may have to pay an application fee of $40 or so.

4.       Find a real estate agent (get referrals from friends).  The seller pays the commission to your agent, so it costs you nothing to have an agent.  Your agent serves you by letting you know what houses are available that meet your needs (they have access to a special database) and by answering your questions about the process.  In theory a agent should also help you get the best price but not necessarily, because the more you pay for the house, the more the agent makes in commission.

5.       Tell the agent what part(s) of town you want to live in, what kind of house you want, and how much the bank said they'd loan you. Your agent will give you a list of houses that match your criteria. Go look at them.

6.       When you find a house you want get the Disclosure from the seller.  This is a list of problems with the house that the seller knows about, and which the seller must give you by law.

7.       If the Disclosure doesn't sour you on the house, ask the agent how much you should offer.  It's rare that you accept the price given by the seller, usually you'll offer slightly less than they're asking.  Get a list of Comparables (similar homes that have sold in the same area recently) from your agent so you can get an idea of how much the house is worth.

8.       You'll make the offer by signing a contract.  If the seller accepts your offer then they'll sign too.  At this point you're generally obligated to buy the house and the seller is generally obligated to sell, though depending on the wording of the contract either of you could have the right to walk away from the deal under certain circumstances.

9.       Have the house professionally inspected.  You generally have to pay this yourself, at the time, and it will cost $350 or so.  If the inspection turns up problems not listed on the disclosure which will cost a lot to fix, try to get the seller to lower the price or fix the problems before the sale -- or walk away from the deal if your contract allows that and that's what you want.

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10.   The bank will have the house appraised to make sure it's worth what you're paying for it.  (They don't want to loan you $200,000 to buy a house that's worth only $150,000.)  You might have to pay this up front; otherwise it will be added to your closing costs.  Besides paying for it up front if that's required, you're not involved in this step of the process.

11.    Find an insurance agent (ask friends for referrals) and get a quote.  You can certainly price-shop 2-3 different companies if you like.  Pick one and tell them you want the insurance.  The cost will be added to your closing costs, you don't have to pay this at the time.

12.    Closing.  You go to the office that's handling the closing (a title company or an attorney, usually selected by the lender or the seller), to take care of the paperwork.  You'll owe some money, such as the down payment, and closing costs unless you got those rolled into the mortgage.  You've either already arranged with your bank to wire the funds to the closing company, or you bring a blank check with you to closing.  You don't need to get a check for the mortgage loan; the bank will wire that directly to the office handling the closing.