Your Ultimate Homebuying Checklist
Buying a new home is one of the largest financial decisions you’ll make. While the homebuying process can be stressful, with some preparation and a Realtor®’s help, homebuying can be an exciting and rewarding experience.
Use this homebuying checklist to keep you on track for a successful purchase.
Find a Realtor® Who’s Right for You
Before beginning your homebuying journey, you’ll want to find a Realtor® with insight into local market conditions and who will be able to guide you through the process, explain your options and answer your questions along the way.
While many consumers believe the term “Realtor®” refers to all real estate agents, it refers exclusively to real estate professionals who belong to the National Association of Realtors®. As members of NAR, Realtors® subscribe to a strict Code of Ethics that goes above and beyond the requirements of state licensing law. Realtors® are dedicated to protecting consumers, guiding homebuyers and sellers and supporting their local communities.
Search for Realtors® near you, and don’t be afraid to interview a few to help you find the Realtor® that will help meet your wants and needs.
Know What You Can Afford
Monthly Mortgage Payment
If you need a mortgage loan to buy your new home, you’ll need to figure out how much you can afford to pay per month. Make a list of your monthly expenses and add them up. This may include expenses like utilities, car loans, food and insurance. Divide your total expenses by your monthly income to find your debt-to-income ratio.
Lenders will use a similar calculation to determine whether you have enough disposable income left to afford your monthly mortgage payments. Realtors® can also provide more information on debt-to-income ratios and other factors lenders use to determine your mortgage terms.
Down Payment
Most loans will also require a down payment. This amount can differ depending on the lender you choose and the programs for which you qualify. Buyers who make down payments of less than 20% may be required to purchase private mortgage insurance, which is available for an additional fee. Your lender can help you explore your down payment options.
Closing Costs
Closing costs are fees that are paid to third parties to facilitate the transaction once you’re ready to close on your new home. These include fees paid to your lender, title searches, associated taxes and more. Talk with your Realtor® and lender to get an idea of how much you may pay in closing costs.
Moving and Home Expenses
When budgeting for your new home, don’t forget to include potential moving costs and home improvement expenses!
Gather Essential Documents
Once you know what you can afford, you’ll need to submit financial documentation to the lender you choose to work with. It will help to have important documentation all in one place ahead of time.
You’ll likely need:
- Your previous two years’ tax returns
- Evidence of your income for the last few months
- Bank statements for the last few months
- Proof of funds for the down payment and closing
- Personal identification (preferably a driver’s license or passport)
Choose a Lender and Get Preapproved
Getting preapproved through a lender will let your Realtor® know you’re ready to start looking at homes. To find a lender who suits your needs, research lenders in your area and look at rates. You can also ask your Realtor® if there are any trusted lenders they work with.
Keep in mind that preapproval does not necessarily guarantee that you’ll get approved for a loan, but it can give you an idea of how much you may be able to spend on your new home. Preapproval also doesn’t lock you into using a particular lender. You may find a better mortgage rate through another lender later in the homebuying process.
Additionally, lenders generally require you to get homeowners insurance as part of the approval process. Now is a good time to get quotes and shop around for your new homeowners insurance policy.
Think About Your Wants and Needs
Before you start looking at homes, get an idea of what you’re looking for. Make a list of your wants and needs. How many bedrooms do you need? What kinds of amenities do you want your future neighborhood to offer?
A few key factors to consider include:
- Square footage, parking, number of bedrooms and bathrooms
- Floorplan practicality, energy efficiency, outdoor space and roof condition
- Management/association fees, local services and convenience
Work with your Realtor® and let them know your priorities. Once you both have a good idea of what you’re looking for, your Realtor® can schedule showings for homes that best match your wants and needs.
During showings, don’t be afraid to ask questions. Realtors® are experts who are here to guide you through the homebuying process and help you make informed decisions.
Make an Offer and Negotiate
Once you find a home you like, your Realtor® will help you make your initial offer. They can provide insight on what a competitive offer may be considering the market conditions.
When your offer is accepted, you’ll likely need a check to submit with your offer. This is referred to as earnest money. Your Realtor® will be able to advise you about the exact figure and the conditions attached.
If your offer is not accepted, you can continue home shopping and making offers until one is accepted. Everyone’s homebuying experience is different and varies in length. Be patient. If it’s taking longer than you’d like, consider working with your Realtor® to re-evaluate your list of priorities. Being open to different options can expand your choices.
Submit a Formal Application for a Mortgage
After the seller accepts your offer, it’s time to start the formal mortgage application process. You’ll need to provide extensive documentation to your lender. This will likely include the documents you submitted for preapproval, as well as additional records verifying your income, credit, identity, assets, debts and more. This can be a time-consuming process.
Prepare for Inspection and Appraisal
A home inspection will help ensure that your new home is structurally sound. Home inspectors will assess things like the plumbing, electrical systems and more. Your Realtor® can help you find a trusted inspector and schedule an inspection.
Your mortgage lender will also arrange a home appraisal to confirm that the property value is a good match for the loan amount. Your Realtor® will help you through this process and help address any issues that may arise. If you’re not satisfied with the appraisal conducted through your lender, you may be able to get an appraisal done by an appraiser of your choosing.
Close on Your New Home
There will be plenty of documents to sign when you close on your new home. Your Realtor® can help prepare the documents, help you understand each one and answer any questions you may have.
During closing, you will be responsible for providing funds for your down payment and closing costs. Your lender will provide the exact amount you owe at closing based on the home you’ve chosen and the purchase price.
You’re a Homeowner
Congratulations! You are now the proud new owner of a home. Take a moment to celebrate, and enjoy personalizing the space and making it your own.
You’ve Completed the Homebuying Checklist!
Now that you’ve studied the homebuying checklist, you’re ready to start the process and find your dream home. A Realtor® will be essential to your homebuying journey. Start by searching for Realtors®.
