The process of buying a home can feel intimidating, whether it’s your first real estate purchase or your third. The housing market we’ve experienced over the past several years doesn’t help either, as buyers struggle with unaffordable home prices, higher mortgage rates and limited inventory.
The key to making it less scary is to know what’s ahead and surround yourself with knowledgeable professionals who can help guide you. Here’s a step-by-step checklist for buying a house:
— 1. Understand the current housing market.
— 3. Get your finances in order.
— 4. Get preapproved for a mortgage.
— 5. Contact a real estate agent.
— 9. Send your earnest money deposit.
— 10. Schedule a home inspection.
— 11. Submit your mortgage application.
— 13. Do a final walk-through.
— 14. Close and receive the keys.
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1. Understand the Current Housing Market
The housing market has been extremely volatile over the last several years. If you’re looking to buy a house, the current housing market is a major factor in your ability to make a successful offer. Before you start home shopping, take your time to learn more about what’s happening in your local market.
“In terms of the market, supply and demand dynamics are driving different situations in the Sunbelt states, which have seen inventory swell, and the Northeast, which has seen inventory contract,” wrote John Walkup, co-founder of Urbandigs, a real estate analytics company, in an email. “In terms of the product, in Manhattan and Brooklyn, the luxury market is powering on as cash sales continue at elevated levels, while more financing-dependent price points are still struggling to keep up with seasonality.”
Jason Sorens, an economist who concentrates on real estate at the American Institute for Economic Research, adds that consumer survey data shows more pessimistic inflation forecasts over the year than forecasts from the Federal Reserve, which could impact mortgage rates.
The 10-year Treasury yield influences mortgage rates, but they also include a spread based on economic conditions and risk factors. If inflation remains high, the Fed is less likely to cut interest rates, which means Treasury yields will stay elevated.
“That said, observers would be surprised if mortgage rates aren’t at least a little lower at the end of this year than they are now,” Sorens explains.
He also sees the growth in rental supply slowing down in 2025 due to the effects of rising rates, nor does he expect a big increase in single-family development. Instead, we should see a moderate increase in home prices. “Home prices should resume rising, even in markets that had a lot of new supply in the last couple of years.”
And despite some states trying to change zoning laws to allow for more starter homes, Sorens says these changes will not affect development until next year.
2. Do Your Research
To help you narrow down your search, make a list of your wants and needs in a house and the neighborhood you prefer to live in. Visit sites like Zillow, Trulia, Redfin and Realtor.com to get an idea of the houses for sale that meet your criteria. Take a look at how much these homes cost, and consider whether it fits within your budget. If not, you may need to make some compromises or adjust your search area.
3. Get Your Finances in Order
Buying a house is one of the biggest financial commitments you’ll ever make, so you’ll want to make sure your finances are solid before looking at homes.
“Navigating the current real estate market calls for a strategic financial approach,” says Matt Dunbar, senior vice president of the Southeast and Gulf regions with national lender Churchill Mortgage. “Homebuyers should aim to strengthen their credit profiles and ensure they have ample savings, not only for the down payment and closing costs but also with flexibility to address potential counteroffers or increase their down payment in a competitive, multiple-offer scenario.”
Understand where you stand financially. Mortgage lenders will look at your cash reserves and compare your income and debts to determine whether you can afford to make monthly mortgage payments. Lenders will also pull your credit report. Most lenders require a FICO score of 620 or higher to approve a conventional loan.
“You always want to have your finances in order,” says Dottie Herman, vice chair emerita and former CEO for Douglas Elliman Real Estate. “Check your credit and make sure all of your credit cards are paid off if you can.”
You can check your credit report for free from each of the three major credit reporting bureaus — Equifax, TransUnion and Experian — once per week at AnnualCreditReport.com. It’s a good idea to request a report from each agency and review it carefully, as there could be inconsistent or inaccurate information.
“I would encourage first-time buyers to look into the programs that may be available to them,” Herman says. “There are also FHA and veterans programs, which can cut down or eliminate your down payment.”
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4. Get Preapproved for a Mortgage
Contact potential lenders to get preapproved for a mortgage. “You wouldn’t believe how many people that I see who are woefully unprepared when they start making offers,” says Kevin Leibowitz, president and CEO of Grayton Mortgage. “Pulling your credit and having a qualified loan officer do a deep dive on one’s income/credit profile is paramount. This is the best way to get set up for success before a buyer starts submitting offers.”
Prequalification is more like a rough estimate of what you can borrow, but a mortgage preapproval is an in-depth process where a lender will verify financial information — W-2s, tax returns, pay stubs, assets, credit — to determine what loans you could be approved for, the amount you can borrow and what your interest rate could be. This can help you figure out what you can afford and gives sellers the idea that you’re serious about the financial commitment.
A strong credit history and financial profile are especially important during times of economic uncertainty because lenders are less willing to take on borrowers with a higher risk of defaulting on the loan.
Leibowitz also recommends getting a mortgage preapproval before contacting a real estate agent.
“Most real estate agents won’t give buyers their full attention unless they know they can follow through with financing to get the purchase done. Which makes sense — why waste time on buyers who aren’t in a position to purchase?” he says.
5. Contact a Real Estate Agent
Reach out to local real estate agents and set up initial meetings or calls. It’s a good idea to interview a few and select the agent who fits your personality and communication style and is knowledgeable about the area where you’re looking to buy. The right agent will help educate you on the homebuying process, point out when price and expectations don’t match and offer insights that you hadn’t thought of before.
Lindsey Harn, a California-based real estate agent at Christie’s International Real Estate, recommends finding an agent who specializes in the neighborhoods where you’re looking and who can help you find properties before they hit the open market.
6. Start Touring Homes
Your real estate agent will likely present you with listings that meet your budget and needs, and also encourage you to look online for other homes you may be interested in. Most buyers prefer in-person tours, but you can also get a virtual tour if you can’t or don’t want to visit the property.
The real estate market typically slows down at the end of the year and picks back up again in the spring, but Herman says don’t wait.
“Get out and start looking early, ahead of the competition,” Herman says. “When prices start to drop, more buyers will start to come out. When you are out in the cold in January or February looking at houses, your competition will be at home drinking hot chocolate in front of the fireplace.”
7. Make an Offer
Once you’ve found the house you’d like to call home, it’s time to have a conversation with your agent about making an offer.
“Prospective buyers should be ready to make compelling offers that reflect both the market value and their personal valuation of the property,” Dunbar says. “This approach increases the likelihood of their offer standing out in a bidding war.”
Review the sale price of similar homes in the area that sold recently to help you determine how much you feel the home is worth. Your agent can put together a list of real estate comparables, or comps, which shows how much buyers paid for similar, recently sold properties in the same area. This can give you a better idea of how much you should offer.
8. Negotiate
When you submit your offer, the seller has three options: accept, reject or counter the offer.
“In some markets, buyers do have more room to negotiate; in some, they do not,” says Mark Joyner, president and principal broker at Napier Realtors ERA in Richmond, Virginia. “A professional who knows their market can educate you as to which direction that market is heading.”
A buyer’s ability to negotiate depends on several factors.
“A motivated seller who is looking to complete the sale quickly will be more inclined to negotiate as would a seller in a community where a buyer has more choices,” says Alex Vidal, Dallas-Fort Worth-based president of ERA Real Estate. “In many cases buyers have more room to negotiate some concessions with the seller. The most common concession is a buy-down of mortgage rates.”
9. Send Your Earnest Money Deposit
Once your offer is accepted, you’ll deposit earnest money with a third party, such as a law firm, title company or real estate broker, which is held in escrow until closing and applied to your down payment or closing costs. Earnest money is known as a good faith deposit, generally 1% to 5% of a home’s purchase price, and shows you’re a serious buyer.
10. Schedule a Home Inspection
With the deal pending, it’s time to get moving with the due diligence process — part of which is the home inspection. A home inspection is a visual assessment of the home’s condition by a licensed inspector, and their findings can help buyers make a more informed decision.
If your purchase offer includes a home inspection contingency, you could negotiate repairs or walk away from the sale altogether.
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11. Submit Your Mortgage Application
When you go under contract, you’ll want to submit your mortgage application as soon as possible. Shop around and compare mortgage offerings to find a lender that best suits your needs. Your lender will give you an estimate of how much you can qualify for and your interest rate.
Your lender may also offer a mortgage rate lock once you’re preapproved, which is typically available for up to 60 days or sometimes longer. A rate lock is a great idea when rates could rise, but if rates drop, you can’t just switch to the lower interest rate.
12. Get an Appraisal
Your lender will typically require an appraisal of the property to ensure the determined sale price matches the market value of the property. The appraisal often figures into the total closing costs of a home.
13. Do a Final Walk-Through
A couple of days before closing, you’ll complete a final walk-through of the property, which allows you to check and make sure it’s still in good condition.
14. Close and Receive the Keys
The closing itself is fairly straightforward and requires signatures noting the transfer of ownership. You may sign documents in person with a representative from your title insurance company or with e-signatures if they are allowed, depending on your state.
Once you have the keys in hand, you’re now the owner of a new home. “In any market, I offer the same tip, especially to a first-time buyer — if you see a house you absolutely love, buy it. You can always refinance down the road,” Herman says.
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Want to Buy a House in 2025? Follow these 14 Steps originally appeared on usnews.com
Update 03/12/25: This story was published at an earlier date and has been updated with new information.
