{"id":156,"date":"2019-12-26T22:08:42","date_gmt":"2019-12-27T06:08:42","guid":{"rendered":"http:\/\/52.25.50.233\/blog\/?p=156"},"modified":"2024-11-18T10:22:17","modified_gmt":"2024-11-18T18:22:17","slug":"the-beginners-guide-on-how-to-buy-a-house","status":"publish","type":"post","link":"https:\/\/www.quicken.com\/blog\/the-beginners-guide-on-how-to-buy-a-house\/","title":{"rendered":"The Beginner\u2019s Guide on How to Buy a House"},"content":{"rendered":"\n

Okay, you\u2019re finally ready to buy a home\u2014the last step before you\u2019re officially \u201cadulting.\u201d<\/p>\n\n\n\n

Take a deep breath. Buying your first home is a huge deal, but it should be exciting! We understand that as the largest financial investment you\u2019ll likely make in your lifetime, the decision can feel daunting\u2014but really it\u2019s quite simple if you take it step by step.<\/p>\n\n\n\n

To show you just how easy, we\u2019ve outlined how to buy a house in just five easy steps. Read ahead to see how simple it can be to buy the home of your dreams.<\/p>\n\n\n\n

Step 1. Should You Buy A House?<\/h2>\n\n\n\n

First things first: Are you prepared to own a home?<\/p>\n\n\n\n

Evaluating this comes down to two main things: do you have consistent income (enough that you\u2019re saving at least 30% of your paycheck after expenses), and do you think you\u2019ll be in your location for the next five to seven years. Buying and selling homes incur a lot of expenses outside of the home themselves, so making sure you are committed to buying a home is an essential first step.<\/p>\n\n\n\n

You\u2019ll also want to envision what your life will look like during this time. Will you be married? Do you plan on having kids? These decisions will help you plan for how much space you\u2019ll need.<\/p>\n\n\n\n

Step 2. How Much House Can You Afford?<\/h2>\n\n\n\n

The main factors in determining what price home you can afford are:
\nYour net income (combined income if purchasing with a spouse)
\nHow much down payment you can afford
\nYour credit score<\/p>\n\n\n\n

Don\u2019t whip out your calculator just yet\u2013\u2013there are lots of good tools that do these calculations for you<\/a>.<\/p>\n\n\n\n

A couple rules of thumb: If you can get your credit score above 720<\/strong>, do so. You\u2019ll likely see better rates from lenders<\/a>. The credit industry works in increments, and a credit score differential of 100 points can add up to tens of thousands of dollars over the lifetime of a loan.<\/p>\n\n\n\n

For income, financial advisors recommend maintaining a debt-to-income ratio of 35% or less<\/a>. This means all your monthly debt (think credit cards, student debts, and now a mortgage) should be no more than a third of your income<\/strong>. A quick way to estimate how this translates to your potential home price is by multiplying your income by three to four times.<\/p>\n\n\n\n

How much you need to save for your down payment has changed a lot in the last decade. While 20% down used to be the standard benchmark, many individuals are now putting 3-6% down (this is particularly true for first-time homebuyers<\/a>). Determining what\u2019s right requires some nuance so we recommend starting with a 10% down payment for your calculations<\/strong>.<\/p>\n\n\n\n

Step 3. Get Pre-approved For A Mortgage<\/h2>\n\n\n\n

Once you can afford a home in the range of what you are looking for, you\u2019ll want to get pre-approved for a mortgage<\/a>. In a competitive housing market, getting pre-approved is an essential way of guaranteeing sellers that you\u2019re able to buy the amount you are bidding for, and also gives you a concrete idea of who you\u2019re borrowing from and for how much.<\/p>\n\n\n\n

Getting pre-approved is actually quite easy, and generally requires a bank statement, credit report, and proof of income. Nowadays, you can quickly get approved online<\/a>, and your letter of approval lasts 90 days.<\/p>\n\n\n\n

Step 4. Find A Real Estate Agent<\/h2>\n\n\n\n

If you\u2019ve made it this far, you\u2019ve gotten through the bulk of the financial parts and can move on to the fun stuff: finding a home!<\/p>\n\n\n\n

To get started, you\u2019ll want a good real estate agent. Not only does a buyer\u2019s agent find properties and negotiate on your behalf, but because they take their cut out of the seller\u2019s side, they\u2019re free for you!<\/p>\n\n\n\n

Finding the right real estate agent is paramount. You\u2019ll want a Realtor (with a capital \u201cR\u201d), which indicates they are a member of the National Association of Realtors and as such are bound by a code of ethics, and you\u2019ll want one who knows your area well. Referrals are still the primary way people find their agents, however, online rating services like Zillow<\/a> and Angie\u2019s List<\/a> are increasingly used to find agents.<\/p>\n\n\n\n

We recommend interviewing at least three to five agents<\/strong> to get a sense of who\u2019s out there, and what style is the right fit for you.<\/p>\n\n\n\n

Step 5. Submit An Offer And Close<\/h2>\n\n\n\n

Once you and your agent have found the right house in your price range, it\u2019s time to make and submit an offer. Here\u2019s how to make it official:<\/p>\n\n\n\n