Buying a New Home: A Step-By-Step Guide

Buying a new home is no small task. It’s a big decision that you should never rush into. From looking at houses to figuring out what you can afford, as well as getting approved for a loan, buying a new home can seem daunting. But it doesn’t have to be! We created a step-by-step guide just for you to help make purchasing your new home as simple as possible.

Why Buying a House Can Be Daunting

Finding a home that’s right for you can seem overwhelming at first because there are many options to consider and steps to take. It’s no small purchase, after all. Do you go for new construction or an existing home? Are you a first-time buyer or not? How much money do you invest for a down payment?

You can eliminate some of the nerves by understanding what to expect and knowing what to do. We’ll walk you through the process and help you feel ready to buy your new home in no time.

What to Expect as a First-Time Home Buyer

The biggest thing to remember as a first-time home buyer is that you don’t have to do it alone. There are many real estate agents and lenders who can help walk you through the entire process. 

Start by looking around for a real estate agent. Ask your friends and family who have recently purchased a new home for their recommendations. Once you find one you like, they can help you find a lender, homes within your prices range, and eventually your new home!

And remember, finding the right home for you and your budget may take a little time. Don’t feel discouraged if you don’t find what you’re looking for right away. As you continue to discuss your budget and preferences with your real estate agent, they can help you find the perfect place.

To help make things even easier, every state offers a variety of first-time home buyer programs. Some programs offer low or no down payments on first-time home purchases, closing cost grants, and more. Talk with your real estate agent or lender to see what programs are available to you.

How to Know What You Can Afford

There are several factors that will help you determine the house you can afford. Below are several questions to ask yourself:

• What is your yearly income?
• What are your monthly debts?
• What is your credit score?
• Do you have money saved for a down payment?
• What are the mortgage interest rates right now?
• Do you want a 15-year or 30-year mortgage?

You can also find mortgage calculators online to help give you an estimate of what your monthly payment would be depending on the price of the house you’re looking for.

Is it more beneficial to rent or buy a home? It honestly depends on you and what you’re looking for. In most cases, owning your own home has more advantages. It enables you to build equity or value in your home. It’s a long-term, stable place to live. It helps build your credit, provides tax deductions, and gives a sense of community and pride of ownership.

If you travel regularly or move often, then renting may be a better option for you. Renting also comes without many of the ownership costs, such as property taxes, maintenance and repairs, and homeowner’s insurance.

Consider what would fit your budget and lifestyle better and decide if renting or buying a new home would benefit you.

Questions You Should Consider Before Buying a New House

You’ll soon feel more prepared to buy your new home, but first, we have a few more questions you should consider. Take a look below:

What does my credit score look like?

Your credit score is important when it comes to buying a home. Most mortgage lenders look at your credit score during the pre-approval process of your loan. The better your score, the better the opportunity to get a loan for your home. 

What affects your credit score? A lot of it depends on how much and how often you borrow money. Your credit score is determined by any credit cards you have, current car loans, whether you make payments on time, and how long you have had a credit history, as well as other factors. 

If you don’t know where to go to figure out your credit score, don’t worry. There are several online sites you can look at, such as experian.com or creditkarma.com. A loan officer can gather that information for you, as well.

It’s also important to remember not to take out any new loans during the pre approval or approval process of your home loan. This can affect your credit score, as well, and doesn’t look good on your score or to the bank you’re working to get a loan from.

What sort of home should I invest in?

This question depends on what you and your family are looking for, as well as what you can afford. If it’s just you or you and a partner, a condo, townhome, or small, single family home can work great for your needs. If you are looking to grow your family or have a large family already, you might consider looking at homes with three or more bedrooms. 

Another option is new construction versus an existing home. Most new construction allows for you to choose certain upgrades or customization to make the home more your own. While an existing home may already have all the upgrades you want!

One other option to consider is buying a home with the opportunity to rent out a basement or a single bedroom. More and more people nowadays use their homes as a method of bringing in extra income with a rental option, like a basement or a duplex. 

Your choices of homes are seemingly endless. It comes down to what you want out of your home.

Is buying a home a good investment in the current market?

This is actually a common question many people ask when they start getting ready to buy a new home. Even though the current market is competitive, it absolutely is a great time to buy!

If you’re ready to spread some roots in a city or town you plan to live in for a number of years, then buying a home is a great investment. You’ll start building equity, as well as enjoy the other perks of owning a home, like the freedom to decorate it how you want and the comfort and safety only a home you own can provide. 

Low interest rates are another reason why it’s a great time to buy right now. By getting into a new home as soon as possible, you can secure a lower interest rate before they potentially climb back up. These rates are a major reason why the current market is so hot right now. When interest rates are lower, monthly payments are lower. Who doesn’t love lower monthly payments?

Who will help you purchase the property?

When it comes time to buy a new home, it’s beneficial to have some help. A good real estate agent can help negotiate a fair price for the home you want, as well as put you in contact with a lender who will loan you the money.

If you work with a builder, like us here at Next Level Homes, oftentimes they have resources available to help. They can point you toward lenders they typically work with, as well as agents who can show you different home models geared toward your preferences.

Just remember, you never have to go through the process of buying a home by yourself. There are plenty of knowledgeable people and useful resources to help you get into the home you want.

Steps to Buying a New House

Once you’ve found the house you want, buying it comes next. There are several steps you’ll need to take to get the loan, and soon after, the keys to your new home. We’ve included the steps below to help you understand exactly what you’ll do in the buying process.

Get Preapproved for a Mortgage

Well before you sign the papers and receive the keys to your home, you’ll want to get preapproved for a loan. You can either look online for local lenders or talk to your bank or real estate agent to point you in the right direction.

Once you get in contact with a mortgage lender, they will need certain information from you, like current salary, any debts you may have, as well as personal information like your birthdate and social security number to pull your credit report. 

After they’ve collected the information they need, they will then determine how much money you qualify for your mortgage loan. Remember, this isn’t an actual loan. It simply acts as a way for you to know how much money a bank is willing to lend to you to help you buy your home. Also, just because you are preapproved for a certain amount, does not mean you have to find a home at that specific price. You can look for lower-priced homes that are under that pre approved amount. 

It’s generally best practice to get pre-approved several weeks before you buy your home. This will assure you get the loan on time, as well as help you lock in an interest rate for your mortgage. Most people start the pre-approval process right before they begin looking at homes.

Finding a Real Estate Agent

A good real estate agent will be your best friend during the home-buying process. They can answer any questions, help you find the type of house you’re looking for, and negotiate a fair price for your future home. 

As with everything in life, some real estate agents are better than others, so do your research. Talk to your friends and family. Ask around for agents people have recently worked with and you will find the right one for you.

One reason a real estate agent is a great option is the number of resources they have at their fingertips. They have access to in-depth and up-to-date housing listings, make connections with great lenders, and can even help you get in contact with builders if you want to get into a new construction home. 

Finding a great real estate agent can eliminate many of the hassles and frustrations from buying your new home.

Have the Home Inspected

It is always a great idea to get a home inspection performed on a home you want to buy, even for a brand new build. A home inspection will give you detailed information about the house you’re considering. If it’s an existing home, an inspection will tell you if the foundation is secure, or if there are any mold, plumbing, or pest problems, as well as other information.

A home inspection on a new home will assure that everything is built to code, including framing, plumbing, and electrical. The last thing you want is to find out something is wrong with the home you just bought and that it will require quite a bit of money to fix. 

Before you sign any paperwork, we highly recommend getting a home inspection done. It will give you extra peace of mind during an already stressful time. Your real estate agent can offer recommendations for home inspectors, or you can look online for anyone local.

Make an Offer

Once you’ve gotten pre-approved, found the house you want, and received an inspection, it’s time to make an offer. This is where a real estate agent can offer a lot of help. Real estate agents can look at what similar homes have sold for and make sure you pay a fair price. 

After you have discussed the price with your real estate agent, they will take the offer to the seller. The seller then has the opportunity to accept or reject the offer. It’s also best to remember that there may be other offers on the home, as well. 

In a perfect world, the seller would accept your offer without any questions. Sometimes, though, negotiations for price take place and it comes down to what you feel comfortable paying and what the seller feels comfortable accepting. 

Once an agreement is made, you, your lender, and the seller will work with a mortgage closer to get all the paperwork signed and the payment made. Once the deal has officially closed, you get the keys to your new home!

You are then free to move in and make your new home your very own.

The Next Level Way to Getting Your Dream Home

Buying a new home is a major milestone in your life and one that shouldn’t be taken lightly. With the tips and tools found in this step-by-step guide, you now have all the information you need to feel comfortable in buying your new home.

At Next Level Homes, we make buying your home as simple as possible. With a wide offering of beautiful homes available, you can find exactly what you and your family are looking for. Book a free consultation with one of our licensed agents today and get into the home of your dreams.

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