What to do Before Buying a House (5 Simple Steps) 

The decision to buy a home is exciting, but if you rush into the process without a plan, it can quickly become overwhelming. To make your homebuying journey as successful as possible, there is a lot to consider—and proper preparation is key.

Knowing what steps to take before you buy can save you money, time, and stress, while helping you find a home that truly fits your life and budget. Here is what to do before you start touring houses or writing offers.

Step 1: Define your vision

You may have already begun to scroll through property listings online or have a picture of your dream kitchen firmly in mind. But the first step to preparing for your property purchase is to determine what you are actually looking for in a home.

In a perfect world you would discover your dream home—the one that seemingly comes ready-made just for you. Since finding the perfect house is rare, it is best to make a list of your housing must-haves and nice-to-haves, as well as location preferences. This way you can narrow your search towards finding a home that most accurately meets your housing needs.

Must-haves and nice-to-haves

• Must-haves are the deal-breaker features, like the number of bedrooms, distance from your workplace, access to main roads, and more.

• Nice-to-haves are home features you would love, but do not necessarily need, like granite countertops, a pool, or walk-in closets.

Outline your priorities clearly so you can evaluate homes more objectively.

Location preferences

Location matters, and depending on your lifestyle and family, there may be a lot to consider. Including:

• Commute times

• School districts

• Neighborhood atmosphere

• Property taxes

• Proximity to family and friends

If you find a home in a great location that is not exactly what you are looking for, consider whether renovations could turn it into your dream home.

Starter home versus forever home

It can be hard to think so far ahead into the future, but it may be one of the most important factors to consider. Though you cannot predict everything that will happen, it is vital to ask yourself if the home you are buying is for the purpose of planting your roots long-term or if you plan to move again in three to five years. Regardless of the timeline that you determine is right for you, keep in mind that it will likely affect:

• How much you should spend

• Whether it makes sense to compromise on size and other features

• The type of mortgage loan you choose

Be honest about your lifestyle, goals, and unique homebuying needs. That way, you can plan your entire homebuying strategy.

Step 2: Get your finances ready

Whether you are months away from buying or thinking years ahead, you can start organizing your finances as soon as possible. Here is how to get started:

Know what you can afford

Using a mortgage affordability calculator will help you estimate how much home you may be able to comfortably afford. The calculations take your income, current debts, and more into account, but remember that it is only an estimate. 

It is best to focus on what fits your lifestyle rather than only looking at the maximum amount you can afford. You will have a more accurate mortgage estimate once you are pre-approved.

Start saving for a down payment (and more)

Depending on the home loan your qualify for, you may be able to put down as little as 3% to 5%. However, if you want to make your offer more competitive (or avoid mortgage insurance), you will likely need to save up for a down payment amount of 20%.

However, your down payment is not the only cost you need to start saving for. Be sure to include financing to cover the closing costs, typically 2% to 5% of the home’s purchase price, and other fees like:

• Appraisal costs

• Home inspection fees

• Title insurance

• Moving costs

Get pre-approved

When the time is right, you will want to get pre-approval for your mortgage. Not only does it show sellers that you are a serious homebuyer, it also provides:

• A firm idea of how much home you can afford

• Confidence in your homebuying budget

• An advantage in competitive markets

Just be sure to understand the difference between pre-approval and pre-qualification. You will also want to start gathering and organizing key documents early on.

Step 3: Assemble your homebuying team

The homebuying journey is not a solo mission that you have to endure on your own. From your mortgage lender to your real estate agent, you will be able to surround yourself with your own homebuying dream team of professionals dedicated to getting you to the closing table.

Real estate agent

Your real estate agent will be one of the most important members of your homebuying team. They will act as your coach, negotiator, and a knowledgeable guide as you search for a home. Here are some examples of what to look for in an agent:

• Experience and knowledge of the local market

• Communicates clearly and frequently

• Listens to your needs and is proactive

Mortgage lender

It is important to choose a lender you trust to walk you through choosing the right loan and help throughout your homebuying journey. Not all lenders are the same. Some may specialize in the type of mortgage you have in mind or offer more competitive rates and terms. It is important to take your time and shop around before settling on one. Be sure to reach out to a few and ask about:

• Loan programs they offer

• Rate locks and other exclusive perks

• Closing timelines and expectations

The right lender will help get you into your dream home and can make all the difference in the homebuying process.

Real estate attorney (may be optional)

Depending on the state you are buying in, a real estate attorney may be required in order to complete your home purchase. However, even if it is optional to hire one, they can be a big help when it comes to reviewing your sales contract and overall peace of mind.

Step 4: Keep an eye on the market

Before you start cruising neighborhoods and online listing sites, you will want to do some market research. This is because the market temperature, whether it is a buyer’s market or a seller’s market, can have a huge impact on your homebuying strategy.

A buyer’s market will offer you more flexibility to take your time and submit offers that include contingencies that benefit you. However, in a seller’s market, the competition can be fierce between buyers, and sellers will have more of an upper hand in negotiations. Before you start house hunting, do some research on:

• Listing prices versus sales prices in your area

• How long homes are sitting on the market

• Current or seasonal homebuying trends

This way, you can be better equipped to recognize the signs of a bad deal.

Step 5: Get ready to make offers

As you get closer to submitting an offer and buying a home, you will need to have everything in place so you are ready to act fast. Here is a pre-offer checklist that you can refer to whenever you need it:

• Pre-approval letter is up to date.

• Proof of funds for your down payment is in hand.

• You know your price ceiling and are prepared to walk away if needed.

• You have discussed offer tactics and strategies with your real estate agent.

It is important to keep this stage of the homebuying process in mind, even from the beginning of the journey. That way you can be better prepared for the unexpected and have a solid offer strategy in mind when you are ready to submit one. 

When it comes to homebuying, you can never be too prepared

Buying a home is not just about finding a house you like. It is also about being prepared when you find the right one. From defining your vision, to preparing your finances and building the right team, the steps you take before buying can set you up to feel confident throughout your homebuying experience.

You do not have to wait for the “perfect time.” By starting now, you will be more prepared when the right house comes along.