Home Buying Checklist For First-Time Home Buyers

You’re not legally required to hire a realtor or real estate agent when you buy a home, but a real estate professional can make it much easier to find the home that’s perfect for you. Real estate professionals are trained in every aspect of the home sale process.

They can help you find a property in your budget and seal the deal at closing. They have your best interests at heart, can advise you on how much to offer for a property, and will help you submit an offer letter.

Perhaps most importantly, a real estate professional can help keep you within your budget.

With your preapproval in hand, you can start searching for homes within your budget.

You may have seen “for sale” signs around your neighborhood. Today, most properties will also be listed virtually. You can use online real estate databases to help you find properties within your budget that fit your needs. Your REALTOR® or real estate agent will be a big help as you look for homes.

Real estate professionals are experts in your local housing market and may have insider knowledge on which homes you might like. Tell your real estate agent about the top qualities you’re looking for in a home and ask them to suggest properties for you to view.

When you view a home, look at more than just the location or features of the house. Don’t be afraid to test the home’s plumbing and electrical system by running water from faucets and flipping light switches.

It’s also best to look at the home's gutters, chimney and trees, noting their condition. Don’t be afraid to ask the seller if the home has had radon, lead paint or carbon monoxide inspections – and ask to see the results.

A home inspector will see and record many of these issues for you when you make an offer on a home. You can save time and stress, though, by spotting deal-breakers while still in the viewing stage.

It’s never a bad idea to be proactive. When preparing to buy a house, you’ll need to submit financial documentation to your mortgage lender, so you should have it on hand.

These required documents include:

• Proof of identification (e.g., a government-issued ID, driver’s license or passport)
• Your last 2 months of income (e.g., pay stubs, bank statements, etc.)
• Proof of funds for the down payment and closing
• Your last 2 years of tax returns, bank statements or investment account statements
• A recommendation letter

Once you’ve followed those first five steps, you can now put in an offer to buy a  property that checks all your boxes. It can be difficult to decide how much you should offer, so it’s best to defer to your agent. They’ll compare sales data and other local property values to help you make a reasonable offer. Your agent will also draw up an offer letter and submit it to the seller or the seller’s representative.

Keep in mind that you can ask for more than just a home sale in your offer letter. Depending on the condition of the property, you may want to request repairs or make your offer contingent upon a successful inspection. You may also ask that the seller add upgrades to the home (like new carpeting or appliances), but keep in mind that this can drive the price up.

When you put in an offer on a home, you make a promise that you’re serious about buying it. You’ll include an earnest money deposit with your offer to prove just that. An earnest money deposit is a small advance you make toward your down payment to the seller. Your earnest money deposit is usually equal to 1 – 3% of the purchase price of your home. 

You’ll need to be 100% sure you want to purchase a home before you submit an offer, because if you back out of the purchase last-minute, you could lose your earnest money deposit.

After making your offer, you’ll simply wait for the seller to respond. The seller has three choices:

1. Accept the offer. If this is the case, congratulations! You’ve bought a home.
2. Reject the offer.
3. Propose a counteroffer. If this is the case, your real estate professional can help you negotiate a purchase price. Sometimes you can’t reach an agreement with the seller and you may need to move on to other properties.

After you reach an agreement with the seller, it’s time for the appraisal and the inspection. Appraisals and inspections vary in a few important ways.

An appraisal only gives you an estimate of how much your home is worth. An appraiser looks at factors like overall property values in the neighborhood and the general condition of the property. Mortgage lenders require appraisals because they need to know that they aren’t lending you more money than your home is worth.

You have a few options if your appraisal comes in lower than what you offered on the home. You can:

• Renegotiate the purchase price with the seller
• Bring a larger down payment and lower the amount of money you’re borrowing
• Request a new appraisal
• Cancel the sale and continue pursuing a different property

A home inspection, on the other hand, gives you a more intimate look at the inner workings of your home. During this process, a home inspector will walk through your property and test things like the electrical system, plumbing and other amenities.

They’ll also look at the condition of the home’s roof, foundation, attic and basement. At the end of the inspection, the inspector will present you with a list of everything they’ve found. You can use this list to request repairs from the seller before closing.

Though an inspection usually isn’t a requirement to get a mortgage, it’s a good idea to include a successful inspection contingency in your offer. A house is a major purchase. The last thing you want is to buy a property with major issues you don’t know about.

After your home passes inspection and undergoes an appraisal, you’re ready to close. Closing involves signing all the necessary paperwork on your mortgage and taking control of the property.

Before closing, you’ll receive a document from your mortgage lender called a Closing Disclosure. These documents include the final terms of your mortgage loan, what you owe in closing costs and your interest rate. It’s important to read and acknowledge your Closing Disclosure. Your lender will arrange a closing meeting once they know that everything looks correct.

Bring your ID, Closing Disclosure and cashier’s check or proof of a wire transfer for your down payment and closing costs to your closing meeting. A neutral third party called a closing agent will lead the process. You’re officially a homeowner as soon as you sign all of your paperwork.