Buying a home can be stressful during the best of times, and it might feel positively overwhelming during a pandemic. Although a few of the details may look different right now, the overall process of buying remains the same — and understanding the key steps can help you reach your goal and make your dream a reality.
No matter when you plan to buy, there are a few things you should know. On average, the process of buying a house takes roughly six months. That includes about 4.4 months to shop, plus 30-45 days to close. The process of buying a house includes more than just touring homes. You also need to review your credit and financing options, find the right real estate agent, make offers and negotiate, get an inspection, prepare to move and, eventually, close on your new home.
Where to start when buying a house
Some of the first things to consider when you’re buying a home are how much you want to spend, where you’d like to live and what’s important to you as a buyer. Here a few questions to ask yourself:
- How much house can I afford?
- Am I going to take out a loan?
- How much do I have saved for a down payment?
- Can I afford my desired neighborhood?
- Are home values increasing or decreasing in the neighborhood?
- How long will my commute take?
- Is the school district a fit for my family?
- Is it within walking distance to amenities and activities?
Once you have the answers to these questions nailed down, you can start your home search.
Here are the 10 most important steps to take when buying a house.
Step 1: Check your credit score
Before you permit a lender to check your credit score, you’ll want to do a thorough review of your own credit report.
What is a credit report? A credit report pulls data from three major credit reporting agencies: TransUnion, Equifax and Experian. It is the report used to calculate both your FICO score and your Vantage score.
You can get free reports from all three reporting agencies, at least once each year. If you find any errors in your report, dispute them immediately so they can be resolved before you apply for financing.
What is a FICO score? A FICO score is the score lenders use to evaluate your creditworthiness. This is calculated by Fair Isaac & Co. and ranges from 350-850.
What is a Vantage Score? A Vantage Score is the credit score you’ll see when you check your score on consumer-facing credit check websites. Your Vantage Score can vary from your FICO score. Lenders do not use your Vantage Score to evaluate your creditworthiness.
The higher your credit score, the lower the interest rate you’ll receive. Generally speaking, a credit score of 720 or higher will get you a good interest rate on a conventional loan, but qualification criteria depends on the specific lender. For FHA loans, you can usually get approved with a credit score of 580 or higher.
If you’re trying to improve your credit score before applying, you should understand factors that can impact your score:
- Payment history
- Total debt
- Length of credit history
- New credit
- Type of credit
Step 2: Figure out how much house you can afford
When you get pre-approved, your lender will tell you the maximum amount you’re able to borrow (we’ll talk more about the pre-approval process later). But you don’t need to wait for the pre-approval to get a general sense of what you can afford. The Zillow Home Affordability Calculator can help guide you to the right price range, taking into consideration your annual income, monthly debts and projected down payment amount, among other criteria.
Prioritize your wish list to fit your budget
Once you have a rough budget in mind, make a list of must-have home features. Your price point will likely dictate the size, location and amenities of your future home. Here are a few examples of wish list items to consider:
- Number of bedrooms and bathrooms
- Square footage
- Outdoor space
- Preferred location
- Type of home
- Layout, features and finishes
- School district
- Pet-friendliness
- Work commute
Step 3: Find a real estate agent
Most buyers find it helpful to have a professional real estate agent on their side to guide them through the process. In 2020, 85% of buyers used an agent during some part of their home search, according to the Zillow Group Consumer Housing Trends Report 2020. Typically, sellers fund the buyer’s agent commission, which makes using an agent a cost-effective option for buyers.
Here are some areas where a buyer’s agent can help:
- Market insights: identifies home value trends, new developments, buyer demand and overall state of the market
- Offer price: determines what a home is worth and recommends a competitive initial offer amount
- Negotiating: knows when to argue for a lower price and how to negotiate contingencies and repairs
- Local familiarity: has insider tips about the neighborhood and area schools
- Professional recommendations: provides referrals for a trusted lender, attorney, contractor or other vendors
- Experience: simplifies the process by handling hiccups, staying on top of due dates and overseeing paperwork
Step 4: Get pre-approved
Unless you’re buying a home with all cash,
