How To Buy A House Step By Step

I hear it all the time…I want to buy a house, where do I start? So if buying a house in 2022 is your goal, I’ve broken the home buying process into 9 steps. This will be a series of posts about buying a house and how to buy a house step by step. The first step of buying a house in 2022 is to make sure that you’re ready to buy a house. Making sure you’re ready is obviously referring to being financially ready, but there’s more.

Emotionally ready to buy?

When you are buying a house you should typically forecast yourself to live there for anywhere from 5 to 7 years. Statistically and in a typical market it takes about four years for you to pay down your mortgage enough to where it becomes profitable for you to sell that home, so that means staying in one place for that time span. You are essentially Putting down roots. So that hits on the emotionally ready… When you think of staying in one place for five years and can’t imagine living anywhere else — that’s a good indication that you are emotionally ready to buy a house. 

Physically ready to buy a house?

Buying and owning a home isn’t just about the process of acquiring a home. After you close on this home now you are a homeowner and that comes with responsibility. Do you have the time, knowledge, and desire to handle the maintenance, repairs, upkeep? It’s definitely more than just paying the mortgage payment. There are crawl spaces And to attics to inspect, air filters to change, yards to mow. If this is something that you have the desire to do or learn how to do then that is a good indication that you are physically prepared to buy a home.

Mentally ready to buy?

This is about the process and your time to go through the process. This journey depending on where you are starting out at this could be as quick as three months or as long as it takes you to get everything in order. All the work just to get to the stage of actively touring homes can be frustrating and overwhelming.  Viewing the homes, making an offer, getting frustrated because of multiple offers, you must mentally be prepared for the highs and lows of the real estate process. Although I asked you earlier if you were emotionally ready, throughout this process it is best if you try very hard to keep your emotions out of the transaction. This needs to be a smart business decision.

Financially ready to buy a house?

The three main categories to evaluate at this point are your:

• Savings
• Credit
• Debt-To-Income Ratio

Savings,

First, you will need money for a down payment. Then there will be closing cost. You will need money for inspections, and there’s the due diligence fee, and earnest money deposit. There’s a lot of money that you will need for the transaction. Typically I tell my buyers they need at least $12-$15,000 before they can start this process. So what does your savings look like? 

Your Credit,

Recently I read report that the majority of the closed mortgages had an average fico credit score of around 740. The higher your credit score is the better mortgage rates and terms you will be able to qualify for. Programs like Credit karma are out there so you can educate yourself. The advice from every lender is to have the client request their free credit reports. This can be done yearly for free on their websites. The three companies are Equifax, TransUnion, and Experian. So what does your credit score look like? How close are you to the average fico score?

Your debt, or your debt to income ratio or DTI.

Watch this video that will walk you through everything about the DTI.

 Lenders look at your debt to income ratio to help determine whether you qualify for a mortgage. They calculate how much of your monthly income is underutilized and determine whether you have room based on your existing situation. As well as whether and how much of a mortgage payment you could afford.

Are You Ready?

Can say that you are ready to commit to living in one place for at least five years? Are you physically ready and have the time and the desire to handle owning a home? If you have a savings account, and your credit score is looking good. You are mentally prepared for the highs and lows of a real estate transaction. Then I think that you are in a great place to start the home buying journey.