Things I Wish I Learned in School: How to Buy a House

Almost everyone plans on buying a home at some point in their life. In fact 87% of millennial renters say so. But only 41% of current homeowners were prepared for the process. It can be overwhelming to learn everything there is to know about buying a house. Most home owners I have spoken to, explain the process as a "roller coaster" ride.

So, if you are on your way to buying your first property or your next property this article covers some key points that might help you prepare for your journey.

1. Get your credit in order (Several Years in Advance of Home Purchase)

Building a good credit score takes time and it is not something that can happen overnight. If you have recently graduated from college or university then there might be some gaps where you didn't have an active loan within the last two years, which could lead to a low credit score. If this is your case, you should keep an open account with a local credit union or other institution so that you can build up strong credit history within the first two years of your current job. The longer it takes to build up good credit, the more difficult it will be to secure a loan at competitive rates.

2. Start saving for your down payment (Several Years in Advance of Home Purchase)

The maximum amount of money you are ultimately able to borrow is usually the price of the home less than 20% of its value, or more commonly known as "20% down". If you plan on buying a $400k home, $80k would be needed towards your down payment. Now there are plenty of exceptions to "20% down" with loans that allow way less down including FHA Loans (as low as 3.5%). Regardless of what loan you choose, the more money you have saved the easier it will be to qualify for homes.

Getting prequalified for a loan will be the next step in the process.

3. Look for lenders (When you are ready to start looking at Homes)

Once you are ready to start the home search, it is vital to get prequalified for a loan so you can see what purchase price you can afford. The bank will likely ask you to submit your last two years tax returns, paystubs and any other documents that may help show your income and credit history. After reviewing this information the bank will provide you with a maximum purchase price that they will allow (I would not recommend spending the maximum). Now you are ready to start looking for your dream home!

4. Find an agent (When you are ready to start looking at Homes)

While not required, when you plan on buying a home, using an agent is a good place to start. An agent can help provide information on the market and the current trends. They can also help you determine the best location, what type of home will work for your family and give you a real estate market analysis. A real estate agent will also work with you on your offer when the right home is found.

5. Make an Offer (After finding a home)

Once you have found the home of your dreams it is time to make an offer. An agent can help provide guidance in this process but this is where negotiation skills come in to play. Be sure to include everything that you want in your offer including selling price, closing date, condition of appliances and HOA requests if any. If there is a counteroffer and it is not what you are looking for, don't be afraid to walk away. There are plenty of homes in the same price range that will be just right for your family.

6. Sign Documents (After negotiating an offer)

Offers are typically accepted with a few conditions including inspections and documents to sign. The lender will require an inspection of the property before your loan can be approved. Once everything is completed you will receive a notice of approval, at this point it is time to book your movers!

7. Closing (When you are ready for the keys)

The final step in purchasing a home is closing. At the closing, you will receive all documents regarding your loan and signing over ownership of your new home to you. Make sure your hand is warmed up because you will be signing ALOT of documents. But once the paper work is signed, the home is yours. Congratulations on your new home!

8. When you move in (Your first day in your new house)

Now the fun begins! It is time to pack up the moving truck and get settled into your new home. Take a breath, sit back and relax as you look around your new home and contemplate on what has taken place to get here. Maybe you will find some treats from the seller or maybe even some good energy! Enjoy this day and if you need help with anything even finding a mover, don't hesitate to ask friends and family for help!